Indian automakers are likely to see double-digit profit growth in the September quarter, according to brokerages, driven mostly by demand for two-wheelers and tractors, with improvement in the passenger vehicle segment set to reflect in December.
Auto companies' sales volumes and profitability have taken a hit, with firms posting single-digit profit growth in the previous five quarters, due to consumption slowdown, a global chip shortage and uncertainties surrounding U.S. tariff policies.
However, tax and interest rate cuts are seen boosting demand further, with the recovery expected to fully show in the December quarter, according to Hitesh Thakurani and Shubhangi Kejriwal of HDFC Securities.
The government's September tax relief on goods from soaps to small cars helped lift retail sales in the final weeks of the month.
IN THE FAST LANE
Indian automakers are expected to post 10–17% revenue growth and about 15% profit growth year-on-year in the September quarter, led by gains in two-wheelers and tractors, according to HDFC Securities.
Top two-wheeler makers Bajaj Auto and TVS Motor are set to benefit from stronger exports, favourable forex rates and a 12% fall in shipping costs, the brokerage said. TVS will report results on Tuesday and Bajaj Auto on November 7.
Tractor sales have also aided the recovery, supported by a normal monsoon, lower borrowing costs and tax cuts, according to Motilal Oswal.
Analysts at Nomura, Kapil Singh and Siddhartha Bera, said tractor volumes were likely to beat expectations.
SHORT-LIVED GLOOM
Growth in the passenger vehicles segment is expected to remain soft, according to Nomura, due to supply shortages, with sales set to dip 1.5% year-on-year in the quarter.
Market leader Maruti Suzuki is likely to face short-term margin pressure from higher launch costs and customer discounts, but exports, led by its E-Vitara line, are emerging as a key growth engine, according to brokerages.
Tata Motors is expected to lag due to cyberattack-led production shutdowns at Jaguar Land Rover but several brokerages said growth is set to pick up due to tax cuts, festive demand and exports.
Maruti will report results on Friday, followed by Mahindra & Mahindra on November 4. Tata Motors is yet to announce a date.
