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We expect the automotive segment to report revenue/EBITDA/profit after tax growth of approximately 15%/30%/30% YoY in Q3 FY24 (Tata Motors Ltd). Earnings growth and the recovery of his Ebitdam will contribute as well.
The main drivers of profit growth will be an increase in average selling prices of up to 8-10% and an improvement in Ebitdam due to the recovery of raw material costs, against a volume increase of up to 12% for OEMs.
Automotive companies’ growth is likely to be more pronounced on a year-on-year basis as they benefit from raw material reversals, strong operating leverage and a gradual recovery in exports.
We expect tire companies to achieve strong year-over-year revenue growth of up to 70% or more. Subsequently, seasonality is expected to reduce revenues for both OEM companies and ancillary players.
Our top picks include OEMS Mahindra and Mahindra Ltd. and Eicher Motors Ltd. Includes CIE Automotive Ltd., Sansera Engineering Ltd., and Craftsman Automation Ltd.
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