Indian auto parts makers Bharat Forge Ltd and Motherson Sumi Systems reportedly are expected to announce big rises in fiscal second quarter (July-September) net profits boosted by higher domestic sales and reviving overseas operations.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
“We expect auto ancillary companies to report good revenue growth in line with the buoyancy witnessed by auto OEMs,” brokerage B&K Securities said in a note to clients cited by Reuters.
Indian passenger car sales rose 33.6% year on year in the first fiscal half (April-September) of this year, according to the Society of Indian Automobile Manufacturers (SIAM).
Two-wheelers grew 25.86% in the first half while commercial vehicle sales surged 41.6%.
Bharat Forge’s net profit is expected to rise to INR692m from INR268.3m a year ago. Its sales may rise to INR6.8bn from 4.2bn led by increased demand from commercial vehicle makers, a Reuters poll of brokerages showed.
Analysts also said an expansion in operating margins would boost quarterly profits for the world’s second largest forgings maker.
“Utilisation levels of overseas operations improved over last year. Domestic (levels) also improved quite a bit, that is why operating leverage would support a higher margin,” Angel Broking analyst Vaishali Jajoo said.
Motherson Sumi, the wiring harness market leader in India, is likely to report consolidated July-Sept profit of INR646m from INR149.6m a year ago.
Its sales may rise to INR19.1bn from INR15.9bn, the Reuters poll showed, but the real profit boost would come from restructuring operations at an overseas unit.
“You have margin leverage coming out of their acquisition of Visiocorp as they have restructured operations. That should boost margins and add to the earnings growth,” an unnamed analyst at a domestic brokerage told the news agency.
Motherson Sumi acquired Europe-based Visiocorp’s rear view mirror business in March and it was renamed Samvardhana Motherson Reflectec (SMR). It has restructured SMR’s assets in Europe and Australia leading to an improvement in margins.
Bharat Forge reports on 23 October and Motherson on 29 October.
