loader2
NRI

Open Free Trading Account Online with ICICIDIRECT

Incur '0' Brokerage upto ₹500

BLOG

Auto OEMs fared well on margin front

ICICIdirect Research 01 Feb 2025 DISCLAIMER

Auto OEMs fared well on margin front

It was a heavy result week in the Auto OEM space. Notably, all OEM’s fared well on the margin front with reported PAT coming in more or less around the consensus estimates. Importantly, none of the OEM’s committed on future growth prospects and sounded cautiously optimistic on the near-term demand. On high base OEM volumes are expected to be single digit in Q4FY25E. Premiumisation and Electrification continue to be the underlying themes in auto space with record EV launches/reveal in the recently concluded Bharat Mobility Global Expo.

Bajaj Auto: Reported steady performance in Q3FY25, maintains 20% EBITDA margin profileBajaj Auto ramp up in the EV domain has been quiet exciting with its Chetak brand amongst the top E-2W domestically. It has also successfully navigated the premiumisation drive in the domestic motorcycle segment. We upgrade our rating on the stock to BUY and value Bajaj Auto at ₹ 10,475 on SoTP basis (26x P/E on FY27E core earnings + value of investments).

Tata Motors: Quarterly results below expectations, muted growth outlook across segmentsThe management indicated high competitive intensity in market place as well as subdued demand environment especially in one of its key markets such as China.

  • We downgrade the stock to HOLD and value it ₹ 780 on SoTP basis (10x/2x EV/EBITDA to India/JLR business on FY26E)

Maruti Suzuki: Volume drives topline growth while higher A&P spends dent margins in Q3FY25 With Exports gaining traction and under penetration in domestic PV space, MSIL is poised to benefit. With capacity expansion underway, we expect Sales and PAT at MSIL to grow at a CAGR 10% & 11% respectively over FY24- 27E. However, with growth tapering in near to medium term, we maintain our HOLD rating on MSIL and value it at ₹ 13,320 i.e. 23x P/E on FY27E

Our Top bet in Auto OEM space is M&M wherein we have a BUY rating on the stock with a target price of ₹ 3,600

Download App

Download Our App

Play Store App Store
market app