Tag: QSQT

What to expect from the likes of ABB, Siemens and BHEL

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The capital goods industry is expected to report average revenue growth of 16% and profit growth of around 17% for the January to March 2024 quarter. supported by record high order books and strong execution.

Cost-saving measures and operational efficiencies may lead to a 14% improvement in the earnings before interest, tax, depreciation, and amortisation (EBITDA). However, the margin outlook remains mixed.

While the order flow has been robust in the recent quarters, a slight moderation is expected now mainly an account of the elections.

Nonetheless, steady order inflows are projected in segments like renewable energy, power, transmission and distribution as well as defence.

Private investment has been selective so far and is also seeing some green shoots. So overall, the order momentum is expected to pick up meaningfully only after July to September quarter of the current financial (FY25).

Export orders, however, are a concern given the sluggishness in most geographies, geopolitical tensions as well as trade disruption.

Margin projections vary. GE T&D, Kirloskar Oil and ABB India are expected to witness expansion anywhere between 1% and 6% in their margins. Bharat Heavy Electricals Limited (BHEL), Siemens and to some extent, Thermax, however, may see some pressure.

Except for BHEL and CG Power, net profits are expected to climb for most of the companies.

In terms of stock performance, capital goods companies have seen a very strong surge with returns exceeding nearly 75% across the board for all companies.

In fact, on a year-to-date basis as well, the stocks have gained anywhere between 18% and 114% for some counters.

However, this strong surge has, in turn, pushed current valuations above the historical averages and the question remains; can these premium valuations be sustained? Will private capex drive the next leg of growth for these capital goods companies?

Renu Baid Pugalia, Senior VP of Research at IIFL Institutional Equities is bullish on companies like Bharat Electronics (BEL), ABB India, Cummins, and small-cap companies like Data Patterns from an earnings perspective.

“Even if we see companies like KEC, Kalpataru, from the lower base, should bounce back strongly on the earnings side. But names like CG Power, Siemens and Thermax will see barely single-digit growth in earnings because of a very high base last year. So to that extent, we expect some moderation on the earnings side for some of the diversified industrials,” she said.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Volume recovery and price hikes could drive strong growth in auto sector

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The auto sector is expected to report strong growth in the January to March 2024 quarter led by volume recovery in both domestic and export markets, especially for two-wheelers.

Analysts are, however, skeptical about a growth recovery in the heavy commercial vehicle (HCV) and will wait for comments from CV players on the future trends.

Auto stocks have outperformed the market this year, with the Nifty Auto Index gaining 71% for the year, and doubling over the past three years.

Segment-wise volume growth expected in January-March 2024

The two-wheeler segment had a healthy volume growth of 25% year-on-year (YoY) in the fourth quarter, while passenger vehicles (PVs) grew 11% YoY.

Medium and heavy commercial vehicle (MHCV) volumes declined 7% YoY while tractor volumes declined 18% YoY during the quarter.

Overall, lower commodity costs are expected to support the earnings before interest, tax, depreciation, and amortisation (EBITDA) margins.

However, the spike in crude oil and rubber prices over the past couple of months may weigh on the profitability of tyre companies.

Also Read | Bajaj Auto expects to grow faster than the industry as it nears entering Europe

Result calendar:

Bajaj Auto has already released its numbers, reporting a solid 35% jump in net profit.

The two-wheeler major posted a recovery in the export markets, which aided performance.

Maruti Suzuki India will declare its results this Friday, April 26.

The car maker is expected to report revenue growth of over 20% aided by volume growth of around 13%, and the recent price hikes.

Also Read | Maruti Suzuki shares cross ₹13,000 for the first time, extend 2024 gains to 26%

Operating leverage, benign commodity prices and lower discounts will aid margins for Maruti.

Ceat, Escorts, Tata Motors and Bosch will be reporting their earnings over the next fortnight.

Valuation table

Bajaj Auto is currently the most expensive auto stock followed by Maruti and Eicher Motors.

“We think that this quarter is going to be a strong quarter both on revenue growth front as well as on market expansion. Barring from the companies which are primarily exposed to CV and tractor segments, we would expect rest of the companies reporting strong double-digit revenue growth and that should translate into sequential margin expansion as well,” said Kumar Rakesh, India Analyst, BNP Paribas in an interview with CNBC-TV18.

Maruti Suzuki is his top pick in the sector, he added.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Chemicals sector may show sequential improvement, but full recovery still two quarters away

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The chemicals industry is anticipated to show a sequential improvement in the January to March 2023-24 (Q4FY24) quarter. However, its year-on-year (YoY) performance is likely to remain weak.

Continued dumping from China, driven by lower demand in the region, is affecting global price realisations.

There are signs of recovery in certain segments of the chemicals industry, notably in end-user industries such as dyes, pigments, and polymers. However, the demand for agrochemicals remains subdued.

Is a recovery on the horizon? Not in the immediate future.

According to Kotak Institutional Equity, a recovery is not expected for at least another one to two quarters, while Elara predicts that price recovery will also take a minimum of two quarters.

Key expectations from chemical companies:

Kotak projects a dip in Aarti Industries‘ profit by 15% over last year. But sequentially, it will be up 0.4%.

For Atul Ltd, profit after tax (PAT) is expected to decline 11% from last year, but grow 17% over last quarter.

Navin Fluorine’s profit is expected to fall 65% on year, but rise 14% over the last quarter.

SRF‘s profit is expected to fall 26% over last year, while Tata Chemicals’ profit is expected to decline 82% year-on-year (YoY).

Commodity chemical companies and soda ash prices continue to be lower.

Vinati Organics‘ profit could dip 28% YoY, but increase 8% quarter-on-quarter (QoQ).

In a recent interaction with CNBC-TV18, Vinati management indicated that the worst is over in terms of business fundamentals, as the trend of destocking seems to be nearing its conclusion.

“We are seeing good recovery for most of the products, customers are sitting on very little or zero inventory and hence the reordering has picked up,” she said.

UPL, the biggest agrochemical company, is expected to see a loss yet again, though losses could come down from the last quarter.

Double-digit price erosion is likely.

PI Industries will be an exception as always. It is expected to see profit growth of 50% YoY, but that will decline 6% QoQ.

Growth will be led by scaled-up in revenues from new products.

Valuations continue to remain elevated across names.

Aarti and Atul with similar end-user profiles are currently trading between 41.6 times and 46 times, SRF and Navin Fluorine are trading between 38 times and 48 times, Tata Chemicals is around 28 times, Vinati Organics is at 39 times, while PI Industries is around 32.5 times.

Ranjit Cirumalla of IIFL concurs with Kotak institutional’s
view that the chemical sector will take at least two quarters to recover.

“Valuation remains expensive and that makes us a bit more cautious on the sector,” he said in an interview with CNBC-TV18.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil and gas Q4FY24 preview: Experts expect a good quarter

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The oil and gas sector is expected to report a healthy set of numbers for the fourth quarter of financial year 2023-24 (January-March 2024).

During the quarter, the Singapore gross refining margins (GRMs) surged to $7.3 per barrel in quarter four from $5.5 per barrel in the previous quarter.

Brent crude prices stayed relatively stable at $83 per barrel on a quarter-on-quarter (QoQ) basis.

Among the top players, Reliance Industries Ltd (RIL) is expected to report consolidated earnings before interest, taxes, depreciation, and amortisation (EBITDA) growth of around 4% on a QoQ basis, and 10% on a year-on-year (YoY) basis.

The oil to chemical (O2C) segment is expected to see an 11% increase in EBITDA, while the retail business and Jio could post single-digit QoQ growth.

Upstream companies like Oil and Natural Gas Corporation (ONGC) and Oil India are expected to see modest EBITDA growth of around 3-5% on a QoQ basis.

This is primarily due to lower operational expenses, while volumes and realisations are anticipated to remain stable.

Despite a mid-March cut in fuel prices, all marketing companies are expected to post better marketing margins. Gross refining margins are also expected to expand.

Also Read | Experts weigh in on the outlook for oil and gas companies in 2024

In terms of the profit estimates, Hindustan Petroleum Corporation (HPCL) is expected to report a growth of around 200%, according to brokerage firm Nuvama.

In the city gas distribution (CGD) space, companies like Indraprastha Gas (IGL), Mahanagar Gas (MGL) and Gujarat Gas are expected to witness volume growth of around 2-3% in the quarter.

However, there are likely to be fluctuations in EBITDA per scm due to price adjustments.

IGL and MGL could see a decline due to price cuts. But Gujarat Gas is expected to do well in terms of EBITDA growth.

Among gas utilities, GAIL could see a 6% increase in EBITDA due to a decline in Henry Hub prices.

Petronet LNG is expected to report 4% increase in EBITDA on a QoQ basis because of better Dahej utilisation and tariffs.

For GSPL, it is expected to be flat in terms of EBITDA growth.

“From an overall perspective, I think the numbers look fairly strong. I think Reliance also is likely to see a fairly strong recovery in its oil-to-chemical segment, which is likely to drive the QoQ improvement that we are looking at on both EBITDA and net profits. So pretty strong quarter overall,” Probal Sen, Sr Analyst, Oil and Gas, ICICI Securities said in an interview with CNBC-TV18.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Third quarter earnings outlook for hospitals and healthcare sector

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In the healthcare space, hospitals are expected to report mid-teen growth driven by the average revenue per occupied bed (ARPOB), aided by an improved payor and case mix.

Occupancies, however, could be sluggish for hospitals due to festival season and children’s holidays. Now analysts expect one to two more quarters of growth for hospitals till the high base starts to probably impact growth.

Stock specific – Apollo Hospitals could report as much as over 50% year-on-year growth in profit led by lower losses in Apollo HealthCo. Operational losses are expected to reduce to as much as around ₹10 crore versus ₹38.7 crore according to some analysts for Apollo HealthCo.

The company saw minimal bed addition, which is likely to keep the hospital revenue growth restricted this quarter and the EBITDA growth for the hospital business to around 2-3%.

Medanta Global Health could see occupancies reduced by around 200 to 300 basis points (bps) quarter on quarter due to the festive season. ARPOBs could rise as much as 9% year-on-year. Analysts will be watching for commentary on increased competition in the Indore market for Medanta in particular.

Also Read | Cement Q3FY24 outlook: What experts anticipate on demand and pricing

For Max Health, the Street is expecting double-digit growth of around 14% YoY with stable average revenue per occupied bed sequentially. When it comes to diagnostic companies, one should expect revenue to be driven by volumes. However, one should watch for the festive season to impact the testing numbers.

Dr Lal Pathlabs is expected to report around a 15% growth led by a low base, Metropolis has indicated witnessing an early double-digit growth in terms of revenue for its core business of around 12% YoY.

Also Read | FMCG Q3FY24 outlook: Experts weigh in on likely outperformers amid challenges

Focus on key segments such as preventive testing should aid overall numbers. For example, Jaanch and Arogyam from Thyrocare and premium and specialised testing for Metropolis were the fastest-growing segments for the company in Q2.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Cement Q3FY24 outlook: What experts anticipate on demand and pricing

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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There are some key factors at play for cement companies in the third quarter of the current financial year 2024. There has been a decline in costs, and the October-December quarterly earnings will come on a low base on a year-on-year (YoY) basis.

Cement prices were raised in the northern, southern and western India at the start of the quarter while in the eastern parts, the price hikes were done in September 2023. A part of these prices increases were reversed in November due to lower demand during festivals, and a labor shortage.

The third quarter will also see the benefits of the fall in energy prices, resulting in lower costs and improved earnings before interest, tax, depreciation, and amortisation (EBITDA). In fact, the costs are expected to be the lowest in seven quarters.

Jefferies estimates that companies in the cement universe could report a 50% YoY growth in EBITDA, with the per tonne EBITDA increasing to four digits. That’s an increase of more than ₹1,000 after nearly eight quarters.

On a regional basis, north-based companies are likely to outperform. That’s going to be driven by higher YoY growth, both in volumes as well as in prices.

After double-digit growth in the first two quarters of the year, expectations are that the cement industry demand will slow down to mid-single digits in the third quarter three of FY24. The state elections, the festival season, and bad weather in South India impacted the construction activity during the past quarter.

Ultratech also reported a 5% growth in India volumes in quarter three. And that’s likely to be in line with industry growth unlike what was seen in the previous few quarters when they led industry growth and in fact, outperformed in the previous quarters as well.

Also Read | FMCG Q3FY24 outlook: Experts weigh in on likely outperformers amid challenges

Jefferies expects ACC and Ambuja to report higher EBITDA growth due to a low base and Shree Cement may benefit from higher pricing in north India.

From the midcap space, JK Cement and Birla Corp could outperform on the growth front.

In a recent analysis of the cement industry on CNBC-TV18, Navin Sahadeo, an analyst at ICICI Securities, pointed out that a combination of price hikes, cost declines, and anticipated operating leverage benefits could contribute to an estimated EBITDA per tonne rise of about 15% to 17% quarter on quarter (QoQ) or around 30-35% year on year (YoY).

Also Read | IT Earnings Preview: Four of India’s top six IT companies may see revenue decline

However, Sahadeo’s optimistic view on the sector seems to be at odds with recent market sentiments. He expressed skepticism about the industry’s actual growth, stating, “If UltraTech Cement has posted a 5% kind of growth YoY, I would like to believe the industry is more in the 3-4% range. So clearly demand has seen a knock because the first half we are growing at 11.5-12%.”

Contrary to Sahadeo’s perspective, Goldman Sachs has downgraded its position on the cement sector from overweight to neutral. In a recent interview with CNBC-TV18, Sunil Koul, Equity Strategist-APAC at Goldman Sachs, shed light on the rationale behind the decision. Koul acknowledged the longer-term potential of the cement industry, citing its connection to both real estate recovery and infrastructure. However, he noted that recent stock surges, exceeding 15%, and anticipated muted volumes over the next couple of quarters led to the downgrade.

“We do think that the absolute upside on a more tactical basis is not going to be there, so that is why we neutralized it,” explained Koul, emphasizing the cautious stance taken by Goldman Sachs in response to the industry’s recent developments.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

FMCG Q3FY24 outlook: Experts weigh in on likely outperformers amid challenges

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The third quarter (October-December) is seasonally the strongest for the consumer sector. There ahs been a noticeable split in how different companies are recovering, a trend often described as a ‘K-shaped recovery.’ This means that while some businesses are thriving and seeing their stock prices soar, others are not faring as well.

For instance, Titan’s stock has risen by 50%, Tata Consumer by 45%, ITC by 38%, and Nestle by 30%. These companies, mainly focused on urban consumers, are the clear winners in this scenario.

The Street has also seen decent gains for the likes of Godrej Consumer Products Ltd (GCPL) on account of the inorganic foray that they made with Park Avenue.

However, if one moves to the rural-focused companies or those in the staples,  there have been many underperformers. Hindustan Unilever Ltd (HUL) is down 1.5% in the last 12 months, Colgate Palmolive India is up just 2%.

So what is the Street expecting in the third quarter?

Analysts expect a gradual recovery owing to the festive season with mid-single-digit volume growth for the entire fast-moving consumer goods (FMCG) pack. The focus will be on whether urban and discretionary consumption continues to thrive, and rural continues to lag, and the problems in the mass market staples business.

However, earnings before interest, tax, depreciation, and amortisation is expected to be better.

Also Read | Nifty 50 poised to reach 25,000 by May, says Nirmal Bang’s Rahul Arora

Analysts will keep an eye on a couple of other things. A potential price decrease with commodity prices cooling off could weigh on the revenue of all companies. Street will also closely watch if there is expansion in the gross margins, and regional competition trends which may have results in enhanced ad spends.

What are the industry updates so far?

Titan has reported a 23% jump in its jewellery business. This means the discretionary demand is doing a lot better. Avenue Supermarts saw a 17% jump in its standalone revenue but a lot lower than its four year average. Again, mass consumption appears to be under pressure.

What are the important things to watch out for apart from the numbers?

One will have to watch out for a couple of these likely outperformers. For instance, United Breweries management told CNBC-TV18 it expects a margin expansion and volume uptick. Honasa Consumer also talked of a potential margin uptick. The outlook is also good for Trent that has had a strong run.

Management commentary on demand revival, regional competition, mergers and acquisitions (M&A) activity and margin expansion will be closely watched.

Valuations have never been cheap in the FMCG space, but now it looks relatively better given the run-up that has been seen in the other spaces.

Industry experts have been concerned about the upcoming year, foreseeing a slowdown rather than an uptick in the market. Vishal Gutka, AVP-Consumer & Media at Phillip Capital, highlighted the prevailing challenges in the industry, emphasising the ongoing stress in rural demand and the absence of meaningful signs of recovery.

Gutka explained that the entire ecosystem, spanning from consumers to distributors, is grappling with various issues, causing a sense of discomfort. He noted that regional brands seem to be faring better than their national counterparts, attributing their success to their ability to meet customer needs and cater to the demands of local mom-and-pop stores. In the current market scenario, customers are seeking lower prices, while retailers are in need of higher margins and extended credit periods. Regional brands, according to Gutka, are better positioned to fulfill these requirements.

The performance of specific FMCG companies has been highlighted in the analysis. Nestle and Tata Consumers continue to outperform, while Jyothy Labs has been commended for its excellent execution of distribution ramp-up. On the jewellery side, Titan is anticipated to report strong numbers.

Gutka suggested top picks for the medium-term perspective, with GCPL standing out in the midcap space. He also expressed continued favor towards Nestle and ITC in the large-cap space.

Manoj Menon, Head-Research and FMCG Analyst at ICICI Securities, is neutral on the FMCG sector overall. Menon prefers discretionary companies, citing few exceptions like GCPL, Tata Consumer, Jyothy Labs, and Nestle, which he believes are making significant efforts to outperform the market.

In terms of the paints space, experts believe that the sector might experience time corrections due to increased noise in the market.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ICICI Sec optimistic on SAIL’s second quarter show, Tata Steel’s long-term growth story

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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SAIL is expected to perform better in terms of realisation in the second quarter, said Amit Dixit, Analyst at ICICI Securities, They are most dependent on external coking coal. So, any decline in coking coal would affect them favourably, Dixit noted.

Regarding Tata Steel, Dixit said that the advantages will materialise once the UK operations are optimised, in line with their plans for restructuring the UK operations. “This is a narrative that requires a longer-term perspective for a complete understanding,” he said.

Also Read | Indian steel companies to hike prices as coking coal costs surge

At the beginning of this month, Fitch Ratings raised Tata Steel Ltd.’s (TSL) long-term issuer default rating to investment grade with a stable outlook. This decision was made due to reduced uncertainty and financial risk stemming from the company’s UK operations.

Also Read | Tata Steel raised to investment grade by Fitch on easing UK risk

According to a recent analysis by CNBC-TV18, it is anticipated that steel companies will report strong outcomes, driven by three key factors: lower costs for raw materials, sustained demand during the traditionally sluggish monsoon quarter, and the favourable comparison to a lower base, particularly in the second quarter of FY23.

For more, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com’s blog

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Q2 earnings: Analyst expects this pharma stock to lead the pack

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As the pharmaceutical sector gears up for the second quarter, industry experts are weighing in on which companies are likely to shine. Vishal Manchanda, a Pharma Analyst at Systematix Group, believes that Lupin is poised to be the standout performer in the upcoming quarter, setting the stage for strong quarter-on-quarter (QoQ) results.

Manchanda said, “Lupin should be the one that should do the best, and the stock price is also potentially reflecting that.”

While Lupin takes the lead, Sun Pharmaceutical Industries is facing challenges in the United States pharmaceutical market. Nevertheless, Manchanda sees a silver lining, noting that Sun Pharma is faring well in the Indian market.

“From an India growth perspective,” he predicts, “Sun Pharma should outpace all other peers in this space.”

On the domestic front, Manchanda expects Mankind Pharma to excel. Mankind Pharma has established a strong presence in the Indian pharmaceutical market and has been expanding its offerings in the United States as well.

However, Divi’s Laboratories presents a unique scenario. The company’s year-on-year (YoY) performance may appear weak due to its past high-performance levels. Yet, on a QoQ basis, Divi’s Laboratories should demonstrate improvement, driven by growth in products supplied to an innovator. Manchanda commented, “My sense is that the street is expecting higher growth from Divi’s Laboratories.”

Cipla is another company that Manchanda has his eyes on. He envisions multiple launches from Cipla, and if these launches materialize as anticipated, the company could deliver a pleasant surprise in terms of growth. “Cipla potentially can surprise in terms of the upside that it can show,” he mentioned.

A recent CNBC-TV18 analysis has estimated a robust quarter for pharmaceutical companies, with revenues and EBITDA growth projected to be around 12-15% year-on-year (YoY). This anticipated growth will be fueled by sales of key drugs in the United States, including cancer medications, and will be further aided by easing cost pressures and currency tailwinds.

For more details, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Elara sees strong quarter for autos but says all eyes are on festive demand

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Jay Kale, the Senior Vice President of Research at Elara Capital expects a good quarter for the auto sector. However, the festive season will play a pivotal role in shaping the volumes for Q3 and Q4, particularly in the two-wheeler space, he said.

Kale likes the tyre space as things are looking up for the industry as of now. However, he also pointed out that with the recent increase in crude oil and natural rubber prices, some softening of margins in Q3 and Q4 might be anticipated.

Ceat’s strong quarterly show led to an intra-day rally in tyre stocks on October 17 with some stocks gaining nearly 11%. Ceat ended the day nearly 4.5% higher at Rs 2,195 a piece.  Shares of JK Tyre and MRF traded at their respective record highs.

Also Read | Bajaj Auto says exports limping back to normalcy

Within the two-wheeler sector, Kale prefers Bajaj Auto, TVS Motors, and Hero MotoCorp. But he is negative on Eicher Motors.

Bajaj Auto’s product mix is consistently improving, which has historically translated into stable margin performance, he pointed out.

Elara Capital has a buy rating on the company.

For more details, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow