The auto sector is set for good tidings this earnings season, on the back of strong volume growth in the fourth quarter. Barring a few companies, earnings of most automobile companies are set to soar, say analysts. The Street expects automakers to report year-on-year revenue growth of 7-9 per cent in the March quarter, driven by healthy volumes.
Commercial vehicle (CV) manufacturers will outshine others this season, as volume growth of medium and heavy CVs has been robust in the March quarter driven by high replacement demand ahead of the BS-IV deadline. Also, the demand for light commercial vehicles is picking up. According to Edelweiss Securities, the medium and heavy commercial vehicles (M&HCV) segment sustained a healthy pace with Eicher Motors/Ashok Leyland/Tata Motors logging strong growth of 41 per cent, 34 per cent and 25 per cent year-on-year (y-o-y), respectively. As a result, most companies would report healthy improvement in margins driven by better operating leverage and better product mix.