Motilal Oswal - MOSL: AUTOMOBILES 1QFY20 PREVIEW-Demand weakens further across segments; OEM margins to contract sequentially for fourth straight quarter

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Motilal Oswal

Jinesh Gandhi

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MOSL: AUTOMOBILES 1QFY20 PREVIEW-Demand weakens further across segments; OEM margins to contract sequentially for fourth straight quarter

Automobiles 1QFY20 Preview: Demand weakens further across segments; OEM margins to contract sequentially for fourth straight quarter, hit four-year low

All auto segments continued facing demand headwinds in 1QFY20 - a trend that has worsened from the previous quarter. A high base, liquidity issues and slowdown amidst elections led to further weakness in volumes.
EBITDA margin for our OEM (ex-JLR) universe is likely to contract for the fourth consecutive quarter by 310bp YoY (-70bp QoQ) to 10.7% due to higher variable marketing expenses and operating deleverage. While almost all OEMs are likely to witness YoY margin contraction, MM and TVSL are expected to deliver a sequential margin recovery of 80bp and 20bp, respectively.
We have lowered our FY20/21 EPS estimates for all companies under coverage, with the highest FY20 EPS cut for AL (~18%), CEAT (~17%), MSIL (~13.5%) and MM (~12%). The least EPS cut is for BJAUT (~3%), TTMT (~4%), MCIE (~4%) and EXID (~5%).

05/07/2019 1 EN

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Jinesh Gandhi

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MOSL: AUTOMOBILES 1QFY20 PREVIEW-Demand weakens further across segments; OEM margins to contract sequentially for fourth straight quarter

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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