Automobile OEMs (original equipment manufacturers) will likely outpace ancillary companies in sales growth in the upcoming fiscal first quarter financial results. “Q1FY24E revenues for OEM universe (ex-Tata Motors) may likely improve 19.7% YoY (+0.9% QoQ), while those for ancillaries may grow +13.5% YoY (+0.5% QoQ),” brokerage firm Elara Securities said in a research note. The report preferred Maruti Suzuki, TVS Motors, Hero MotoCorp, and Bajaj Auto as their top stock picks in the auto OEM segment. Further, Samvardhana Motherson International, UNO Minda, and Minda Corporation are among the brokerage’s top stock picks in the ancillaries segment.
EBITDA margin to be flat QoQ
Elara report anticipated that besides the revenues, the Q1E EBITDA for both Auto OEM as well as Auto Ancillary is expected to report growth on YoY but remain flat on QoQ. The EBITDA for Q1E for Auto Universe will likely grow by 45% YoY. However, it is expected to rise by just 1% on QoQ, primarily due the pass-through of raw material costs and an improvement in average selling price. The EBITDA for the Auto Ancillary segment is anticipated to grow by 46% on YoY but only 0.5 % on QoQ, indicating a relatively marginal increase in revenue.
Auto stocks performance
In the OEM segments, the stock prices of Maruti Suzuki, TVS Motors, and Hero MotoCorp have risen by 19.5%, 32%, and 14.7% respectively in the last 6 months. The stock price of Bajaj Auto rose by a whopping 38.9% in the last 6 months. In the ancillaries segment, the stock prices of Samvardhana Motherson International, UNO Minda, and Minda Corporation witnessed a surge of 19.8%, 9.4%, and 39.1% respectively in the last 6 months.