Revenues and earnings at Indian component makers are expected to have fallen in the January-March quarter, as both domestic demand and exports slowed, a brokerage said.
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“Broadly, the sector is expected to deliver muted earnings owing to exaggerated losses in some of the medium to small ancillary companies,” Angel Broking said in a report, according to Reuters.
“Amtek Auto and Bharat Forge could surprise on the declining side… owing to large business exposure in the US and European markets,” the brokerage added.
Bharat Forge, Motherson Sumi and Amtek Auto will see profits slumping 40%-80%, with only Exide Industries bucking the trend and posting a rise, the news agency’s poll of brokerages showed.
“In the domestic sector, firms with higher exposure to the embattled commercial vehicle segment will fare worse than those supplying the bulk of their products to the passenger car market, an anonymous analyst told Reuters.
Bharat Forge and Amtek have a substantial exposure to the domestic commercial market which is grappling with a fall in demand, the analyst said. Bharat Forge sales will also be hit as it gets more than half its revenues from the US and Europe where the OEM market has been hit by the ongoing recession, he added.
A decline in commodity prices did not benefit Bharat Forge as it was passed on to customers due to pass-through contracts with them, ICICI Securities said in a note.
Motherson Sumi will also see a fall in revenue but will fare relatively better due to a diversified footprint across Europe and the Middle East and greater exposure to the domestic passenger car market, analysts told Reuters.
Bharat Forge’s profit is expected to fall 77.09% to INR189.83m.
Amtek Auto’s Jan-March consolidated net profit is seen falling 88.2% to INR159.5m while Motherson Sumi’s consolidated profit is likely to drop 42.97% to INR352.5m.
However, Exide is expected to post a modest growth in fourth quarter profit aided by robust return from the battery replacement market and a fall in raw material prices, Angel Broking analyst Vaishali Jajoo told the news agency.
“The replacement market will support the growth better as OEMs are not doing well,” she said.
Exide Industries’ profit is seen rising 8.14% at INR679.33m.
According to India’s Society of Automobile Manufacturers, car sales rose 1% on year to 129,358 units in March, boosted by cheaper credit, a government stimulus package and rural demand. But truck and bus sales fell 26.2% year on year to 41,881 units.
