Auto-makers may show mixed trends in both topline and bottomline performances for the March quarter, though many firms did clock better sales during the period.

Starting with Maruti Suzuki India on April 27, the companies will be declaring their results over the next one month (till May-end) for the January-March quarter as well as for the full fiscal 2014-15.

According to a report by ICICI Securities, barring Mahindra & Mahindra (M&M), all the four-wheeler companies are likely to show strong growth in revenues and sequential as well as year-on-year (YoY) improvement in margins.

Weakened sentiment

However, it said the excise duty hike effective fourth quarter and unseasonal rains dampened sentiment — especially in rural India — the impact of which was visible in motorcycle sales, which declined 6.3 per cent YoY.

While dealer sentiment in the motorcycle segment has turned negative, it is still cautious in passenger vehicles and commercial vehicles.

This is likely to get reflected in the results of two-wheeler companies, which may see a revenue growth of 5 per cent and earnings before interest, taxes, depreciation, and amortisation (EBITDA) contraction of around 1 per cent, said the report.

According to analysts, only Maruti Suzuki can outperform during the fourth quarter as well as full year.

Maruti’s revenues are expected to increase 12 per cent YoY on the back of a 7 per cent increase in volumes and higher realisations owing to improvement in the product mix (the Ciaz launch).

The indirect benefit of Japanese yen’s depreciation and lower discounts to flow into the EBITDA margin will also contribute to its growth story, they said.

“Because of the rupee strengthening, raw material imports were cheaper than last year. For the overall industry, the bottom line is expected to be better than last year because many original equipment manufacturers had cut costs, such as not spending on marketing and giving discounts,” Abdul Majeed, Partner at PwC India, told BusinessLine .

While Maruti Suzuki is expected to grow by 46 per cent to ₹1,168 crore in its net profit during the fourth quarter (compared with ₹800 crore in same quarter last year), M&M is likely to report a decline of 44 per cent at ₹544 crore (against 967 crore) during the January-March quarter this year.

Two-wheelers

M&M’s sharp fall will be largely driven by a decline in tractors sales during the last few quarters, said the analysts. In the two-wheeler segment, while Hero MotoCorp is estimated to grow by 17 per cent at ₹648 crore in its net profit (versus ₹554 crore in the same period last year), Bajaj Auto is expected to report a decline of 23 per cent at ₹583 crore (against ₹762 crore), said analysts.

“It would be a muted quarter for Bajaj Auto because not only their sales, but margins have also declined due to expenditures such as in sporting events and marketing investments,” said an analyst requesting not to be named.

For Tata Motors, too, it will be a mixed bag, with slight improvement in the profit on an annual basis, said the analysts.

“Overall, the industry has declined by around 1 per cent in sales and many companies did not do well during the last quarter as not much demand was created. While some companies did extremely well, others were bleeding in sales,” said Puneet Gupta, Associate Director at automotive consultancy firm IHS India.

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