Q1 Preview: Near term margin squeeze, better 2H set up. Buy 4W pullback: Earnings Preview

研报英文原文证据摘录

Q1 Preview: Near term margin squeeze, better 2H set up. Buy 4W pullback: Earnings Preview

Y27 segmental growth (Y/Y)

margin and fuel inflation worries at the margin. Steel prices, however, remain range

bound. A broader reversal in metal basket bodes well for margin outlook ahead, 30%

Q1FY27 Wholesales (Y/Y)

especially for PV & 2W OEM. Q1 will likely mark the margin trough, with gradual

recovery from Q2 onwards as lower RM & price hikes start to flow through. Beyond 20%

metals, sharp cool off in crude also reduces case for further petrol price hikes or lowers

the risk of monetary tightening and the consequent demand impact. Gas / labour 10%

availability concerns have eased too, making macro backdrop seem less concerning for

0%

sector post the US-Iran ceasefire. Key risks ahead are El Niño’s impact on monsoon & PV Tractors 2W CV

rural demand and base effects in 2H, given last year’s GST-cut-led boost. That said,

Source: SIAM, Company Reportsgiven Q1 growth & retail demand momentum, we see upside risk to our industry growth BofA GLOBAL RESEARCH

forecasts of 7-8% for PV/ 2W, 4-5% for CVs & decline in tractors for F27.

4W pullback an attractive opportunity: Prefer M&M, TMCV

4W OEM stocks have corrected sharply post the Iran conflict. While near-term earnings Exhibit 2: EBITDA margin estimate for

will remain under pressure, resilient demand and potential margin normalization makes Auto OEMs

case for constructive view on select names with macro set up getting better. We prefer India Autos: Q1FY27 EBITDA margins

companies with scope for share gains as supply-chain constraints ease and product cycle Q1FY27E

accelerates. We like M&M on favorable risk-reward, with tractor downcycle concerns EBITDA margin (BofAe) Q/Q (bps)

overdone, and Tata Motors CV as CV cycle fears recede.