Auto companies posted a mixed set of numbers in the first quarter of FY14. Earnings before interest, tax, depreciation and amortization (Ebitda) margin expanded due to better product mix, favourable currency movement and softening in raw material prices. Volumes remained subdued in two-wheeler medium and heavy commercial vehicles and passenger vehicles segment on the back of weak demand due to macroeconomic headwinds prevailing in the country. Utility vehicles’ sales was also affected by increase in excise duty, while a sharp jump was seen in tractor demand on the back of strong monsoon.
Tata Motors Ltd showed mixed performance on a stand-alone basis. It showed poor performance due to weaker product mix and higher marketing cost, which was offset by Jaguar Land Rover’s performance on the back of a better product mix. Numbers for Maruti Suzuki India Ltd were below expectation dragged by lower volume and muted realization due to adverse product mix. Mahindra and Mahindra Ltd showed moderation in the automobile segment, which was compensated by growth in the tractor segment. In the two-wheeler segment, Bajaj Auto Ltd and Hero Motocorp Ltd’s Ebitda margins were above consensus due to decrease in raw material cost and favourable currency movement.
Edited excerpts from a report by IndiaNivesh Securities Pvt. Ltd. Comment at email@example.com