Shares of automobile companies traded higher on Monday after Kotak Institutional Equities outlined its expectations for the June quarter earnings season.
Bajaj Auto climbed 2.07% to Rs 9,988 on the NSE, TVS Motor gained 2.06% to Rs 3,702.10, Apollo Tyres advanced 2.01% to Rs 457.50, Ashok Leyland rose 1.70% to Rs 167.14, CEAT added 0.97% to Rs 3,836.20, while Maruti Suzuki was up 0.27% at Rs 14,405.
In its Q1FY27 preview, Kotak said it expects a mixed quarter for the auto sector, with two-wheeler manufacturers and diversified auto ancillary companies likely to outperform, while Hyundai Motor India, Tata Motors and tyre companies could face pressure from higher commodity costs.
The brokerage said, "We expect revenues for the auto stocks under our coverage to increase by 17% yoy in 1QFY27," adding that "it will be a mixed quarter with weak prints from Hyundai Motors, TMPV and tire companies. 2W OEMs and diversified auto ancillaries will have a strong quarter."
Kotak expects Bajaj Auto's EBITDA to increase 40% year-on-year, TVS Motor's EBITDA to rise 32%, Eicher Motors' EBITDA to grow 27%, and Maruti Suzuki's EBITDA to increase 7%. Mahindra & Mahindra is also expected to report 7% EBITDA growth, supported by higher automotive and tractor volumes.
The brokerage expects Hyundai Motor India to report a 31% year-on-year decline in EBITDA, while Jaguar Land Rover's EBITDA is seen falling 32% because of operating deleverage, raw material headwinds and adverse foreign exchange movements.
Among component makers, Kotak expects Bharat Forge, Endurance Technologies, Uno Minda and Sona Comstar to post healthy growth, while tyre manufacturers including Apollo Tyres, CEAT and MRF are likely to see margin pressure from elevated rubber and crude-linked input costs.
Kotak added that easing crude oil prices and softer rubber prices towards the end of June should help margins improve sequentially from the September quarter onward.