Auto Sector Shows Robust Growth in September Quarter, According to Axis Securities

Auto Sector Shows Robust Growth in September Quarter, According to Axis Securities

VoM News Desk | November 23, 2023 | 07:54 PM IST | Breaking News | Follow on Google News

Auto Sector Shows Robust Growth in September Quarter, According to Axis Securities

Auto Sector Shows Robust Growth in September Quarter, According to Axis Securities

The auto sector has reported impressive growth in the September quarter, with companies under Axis Securities’ coverage demonstrating significant revenue, EBITDA, and PAT growth. This performance has been driven by higher Average Selling Prices (ASPs), increased sales volumes, and operational leverage.

Key Highlights of the Report

• Overall Sector Growth: Revenue, EBITDA, and PAT grew by 16%, 49%, and 56% YoY, respectively.
• EBITDA Margins Expansion: Margins expanded by 315 basis points YoY, due to higher ASPs and operating leverage.

Performance of Auto Ancillaries

• Growth in Ancillaries: Revenue, EBITDA, and PAT in the auto ancillaries sector grew by 12%, 18%, and 18% YoY, respectively.

Outlook and Recommendations

• Stable or Improved EBITDA Margins: EBITDA margins are expected to remain stable or improve, driven by a richer product mix and positive operating leverage.
• Buy on Dips Strategy: Axis Securities recommends a “Buy on Dips” strategy for quality stocks in the sector, considering the current valuations.
• Expectations for FY24: Continued premiumisation in FY24/25 and sustained 2W sales volumes are anticipated.

Top Picks in the Auto Sector

• Maruti Suzuki: ‘Buy’ call with a target price of ₹11,800.
• Ashok Leyland: ‘Buy’ recommendation with a target price of ₹205.
• TVS Motor: ‘Buy’ rating with a target price of ₹2,100.

Top Picks in Auto Ancillaries

• CIE Automotive: ‘Buy’ call with a target price of ₹585.
• Steel Strips Wheels: ‘Buy’ recommendation with a target price of ₹325.

The report highlights the auto sector’s resilience and growth potential, driven by strategic expansions, product innovations, and favorable market conditions. These factors are contributing to the sector’s robust performance and positive outlook for the future.

VoM News Desk

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