Automobiles Q1FY13 preview: A subdued quarter
Highlights:
- 1QFY13 was a subdued quarter for automobile companies as the volume growth across various segments of the sector moderated further from the levels witnessed in 4QFY12.
- While the two-wheeler segment posted a growth of 11% YoY, the passenger car segment grew 5% YoY and the commercial vehicle segment registered 6% YoY growth.
- Increase in excise duty on vehicles with effect from April 2012 and fuel price hikes coupled with a weak macro-economic environment led to lower volume growth during the quarter.
- Due to lower volume growth, the profitability of companies in Nirmal Bang's coverage universe is to remain under pressure following higher advertising expenditure and increased discounts on vehicles.
- Adding to all this is the impact of adverse movement of the rupee versus the US dollar during the quarter.
- From the coverage universe, Hero MotoCorp is the only company that is expected to report a growth in profitability, on YoY as well as QoQ basis. In the case of others, 1QFY13 profits are expected to either decline sharply or remain subdued on YoY basis. Following the recent run-up in the share price of TVS Motor, Nirmal Bang downgrades their rating on it from Hold to Sell.
- 1QFY13 was a subdued quarter for automobile companies as the volume growth across various segments of the sector moderated further from the levels witnessed in 4QFY12.
- While the two-wheeler segment posted a growth of 11% YoY, the passenger car segment grew 5% YoY and the commercial vehicle segment registered 6% YoY growth.
- Increase in excise duty on vehicles with effect from April 2012 and fuel price hikes coupled with a weak macro-economic environment led to lower volume growth during the quarter.
- Due to lower volume growth, the profitability of companies in Nirmal Bang's coverage universe is to remain under pressure following higher advertising expenditure and increased discounts on vehicles.
- Adding to all this is the impact of adverse movement of the rupee versus the US dollar during the quarter.
- From the coverage universe, Hero MotoCorp is the only company that is expected to report a growth in profitability, on YoY as well as QoQ basis. In the case of others, 1QFY13 profits are expected to either decline sharply or remain subdued on YoY basis. Following the recent run-up in the share price of TVS Motor, Nirmal Bang downgrades their rating on it from Hold to Sell.
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