Indian Firms Report Q1 Results as Autos Face Margin Squeeze
A batch of 43 Indian companies, including major automakers and hospitality groups, are releasing quarterly results today that will test whether robust demand can outpace rising raw material costs.
Forty-three Indian companies are set to release June-quarter earnings today, headlined by major automakers and infrastructure names. The results arrive after a subdued trading session on Monday that saw the benchmark Nifty 50 fall 95.80 points to 24,238.50, while the BSE Sensex dropped 442.93 points to 77,708.52.
Analysts expect the automotive sector to report strong volume growth, though rising input costs are forecast to weigh on profitability. Bajaj Auto is projected to post 31.5% year-on-year earnings growth according to Motilal Oswal, driven by a roughly 29% surge in total volumes.
The motorcycle manufacturer's export segment was a particular bright spot, jumping 54% year-on-year and pushing the export mix up to 51% from 44.8% in the previous quarter. However, the brokerage cautioned that this momentum faces headwinds. “The key benefit for BJAUT in 1Q is expected to be favourable currency movement and strong volume growth, which are likely to largely offset significant RM pressure,” the firm said. Motilal Oswal estimates margins contracted 60 basis points quarter-on-quarter to 20.2%.
Rival TVS Motor faces a similar dynamic. Kotak Institutional Equities forecasts a 35% year-on-year revenue increase on the back of 28% volume growth and higher average selling prices. Yet, raw material inflation is taking a toll. “We forecast EBITDA margin to decline by 90 bps qoq due to RM headwinds (400 bps impact), partly offset by (1) price increases (150 bps), favourable FX (100 bps), (3) operating leverage benefits, (4) richer product mix and (5) cost-control measures,” the brokerage noted.
Outside of manufacturing, Indian Hotels Company is expected to show steady domestic expansion. Kotak projects consolidated revenue will grow 9% year-on-year to ₹22 billion with EBITDA margins reaching 29%. “We build in 8% yoy ARR growth and marginally higher occupancy of 75% (+70 bps yoy) on a standalone basis, supported by a modest base despite some impact from the West Asia war in the current quarter,” Kotak said.
Motilal Oswal is slightly more optimistic on the top line, estimating 13% revenue growth and a 28.4% margin. “The demand scenario in key markets, along with improvements in occupancy and ARR, is the key focus area. Domestic business is expected to be the growth driver for 1Q amid softness in the international business,” the firm said. The busy earnings day also features Adani Energy Solutions, Adani Total Gas, JSW Infrastructure, and Bandhan Bank.
