ANALYSIS
Low India sales growth hurts auto cos Q4; ancillaries beat Street
This story was originally published at 16:03 IST on 9 June 2025
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By Anand JC
NEW DELHI - Automobile companies' revenues for the March quarter came in a notch below analysts' estimates as most segments, barring tractors, struggled to report robust wholesale sales. The top line performance of auto ancillary companies was higher than analysts' expectations and was driven by increased production by commercial vehicle and tractor makers, along with a steady growth in the replacement segment amid weakness in the global market, according to analysts.
The bottom line of 10 automobile companies part of Nifty 200 contracted 25.6% on year in the March quarter, and on exclusion of one-time items, the decline moderates to 23.9%. However, this sharp fall is because of a 48% contraction in the net profit of Tata Motors Ltd. due to a high base of last year when the company had a tax write-back of over INR 80 billion. This company's net profit alone forms 39% of the 10 firms' aggregate bottom line.
Excluding Tata Motors, the remaining nine companies' net profit fall reverses to a 12% growth for the latest quarter, higher than analysts' expectation of 9.1% growth. This growth was higher than Nifty 200 companies' aggregate net profit growth of 6.9%, adjusted for one-time items. Only five automobile companies' on-year net profit growth was better than that of this index, including Ashok Leyland Ltd., Eicher Motors Ltd., Escorts Kubota Ltd., Mahindra & Mahindra Ltd., and TVS Motor Co. Ltd.
Nifty 200 companies' revenue for the March quarter grew 5.9%, around 20 basis points better than the 10 automobile firms' growth of 5.7%. Analysts had expected these companies' revenue to grow 6.4%. Six out of 10 companies reported a better-than-Nifty 200 revenue growth. These were Ashok Leyland, Eicher Motors, Escorts Kubota, Mahindra & Mahindra, Maruti Suzuki India Ltd., and TVS Motor.
Seven auto ancillary companies part of Nifty 200 reported a revenue growth of 7.9% on year, much higher than analysts' estimate of 6.1%. Only three auto ancillary firms'--Bosch Ltd., MRF Ltd., and Samvardhana Motherson Ltd.'s--top line growth exceeded the 5.9% growth of Nifty 200 companies.
Analysts had forecast a bottom line decline of 13.9% for these component makers. However, it declined at a faster rate of 14.4% on year, and on excluding exceptional items, the fall moderates to 11.9%. No auto ancillary company part of Nifty 200 reported a growth in profit.
AUTOMOBILE COMPANIES
The top line growth of automobile companies was driven by a double-digit increase in tractor despatches but was restricted by low-to-mid single digit growth in passenger vehicle, commercial vehicle, and two-wheeler sales. A better mix of product offerings by select original equipment manufacturers also aided aggregate revenue growth of these companies, but was partly offset by higher discounts, Kotak Institutional Equities said in a note. Companies continued to offer higher discounts on hatchbacks and sedans in the face of dwindling demand for these sub-segments.
Similar to the other three quarters in 2024-25 (Apr-Mar), demand in rural areas outpaced the demand in urban areas, leading to a decline in despatches of automobile units in the quarter under review. Tractors, a rural-dependent sub-segment, remained the outlier in the automobile industry, with a growth of 17% on year in the March quarter, according to Motilal Oswal Financial Services.
Two-wheelers form a significant bulk of overall automobile sales in India. After seeing a robust growth in despatches in Apr-Sept of FY25, sales decelerated in Oct-Mar to 1.4% on year. Remove electric two-wheelers from the equation, and growth in this sub-segment's despatches remains flat on year. Scooter sales grew 7% on year, but motorcycle and moped sales fell 3.5% and 10.8?ch, Motilal Oswal said.
Wholesale sales of passenger vehicles in India was only 2.4% on year in the March quarter, with utility vehicles driving a bulk of the sales at the expense of passenger cars. Companies are increasingly betting on sport utility vehicles over hatchbacks in India, with the former's contribution to overall product mix across industry increasing to 54.9% in the March quarter.
Commercial vehicle despatches in India grew 1.5% in the reporting quarter, primarily driven by a double-digit growth in bus wholesale sales.
The total expenses of the 10 automobile companies grew nearly 5% on year. Sequentially, they grew 3.5%. Cost of materials consumed, which form 61% of the total expenses, increased 6.1% on year, a four-quarter high.
AUTO ANCILLARIES
Inflation in raw material prices impacted the overall earnings of multiple auto ancillary firms, especially tyre-makers such as MRF, Balkrishna Industries Ltd., and Ceat Ltd. "We expect the margins to recover from 1QFY26E (June quarter of FY26), as the rubber and crude oil prices have corrected by 10-15% in the past 2-3 months," Kotak said.
In its earnings conference call, Apollo Tyres' management acknowledged that FY25 was a challenging year for the company. The company reported flat volumes in India and a single-digit contraction in its Europe business, while replacement volume domestically grew in single-digit. The company does not expect much relief from raw material inflation, as natural rubber prices are not forecast to decline much from current levels.
Battery maker Exide Industries' margin fell 170 basis points on year to 11.2% for the March quarter due to an uptick in input costs and write-offs in the quarter.
Balkrishna Industries, which makes tyres used in heavy machinery for mining and agricultural operations, reported an EBITDA margin of 24.8%, higher than HDFC Securities' estimate of 24.4%. However, the company held back its guidance due to the ongoing tensions around US tariffs and geopolitical issues.
Worries due to the US tariffs was also echoed by Sona BLW Precision, which spoke of a tough macroeconomic environment. The company's management expects around 3% of revenues to be at risk of losing business owing to customers shifting their suppliers.
The following table shows the performance of the 17 companies in the auto sector vis-a-vis the consensus estimate for each company as well as against the consensus estimate for the auto sector and the Nifty 200 index:
| Jan-Mar quarter | PAT growth (Actual) | PAT growth (Estimate) | Revenue growth (Actual) | Revenue growth (Estimate) |
| Nifty 200 (YoY) | 6.89% | 0.78% | 5.85% | 5.2% |
| Auto | -23.88% | -31.18% | 5.67% | 6.37% |
| Auto ancillary | -14.39% | -13.85% | 7.86% | 6.08% |
| Company | PAT beat analysts' estimate | Adjusted PAT growth % | Adjusted PAT growth estimate % | PAT beat sector growth | PAT beat Nifty 200 growth | Revenue beat analysts' estimate | Revenue growth % | Revenue growth estimate % | Revenue beat sector growth | Revenue beat Nifty 200 growth | |
| Ashok Leyland | Yes | 29.84 | 14.26 | Yes | Yes | No | 5.68 | 7.99 | Yes | No | |
| Bajaj Auto | Yes | 5.85 | 4.22 | Yes | No | Yes | 5.78 | 3.97 | Yes | No | |
| Bharat Forge | No | -9.21 | -7.55 | Yes | No | No | -7.11 | -4.20 | No | No | |
| Eicher Motors | Yes | 27.25 | 13.71 | Yes | Yes | Yes | 23.15 | 21.95 | Yes | Yes | |
| Escorts Kubota | Yes | 18.02 | -10.92 | Yes | Yes | No | 6.14 | 10.25 | Yes | Yes | |
| Hero MotoCorp | No | 6.39 | 7.80 | Yes | No | Yes | 4.41 | 2.35 | Yes | Yes | |
| Mahindra & Mahindra | No | 21.85 | 23.48 | Yes | Yes | Yes | 24.28 | 19.66 | Yes | Yes | |
| Maruti Suzuki India | No | -4.30 | -0.52 | Yes | No | No | 6.38 | 7.45 | Yes | Yes | |
| Tata Motors | Yes | -48.35 | -58.85 | No | No | No | 0.39 | 2.60 | No | No | |
| TVS Motor Co. | Yes | 75.54 | 52.32 | Yes | Yes | Yes | 16.91 | 14.47 | Yes | Yes | |
| Apollo Tyres | Yes | -22.36 | -23.99 | No | No | No | 2.64 | 4.47 | No | No | |
| Balkrishna Industriess | No | -24.70 | -8.76 | No | No | Yes | 2.75 | 0.91 | No | No | |
| Bosch | Yes | -1.91 | -4.25 | Yes | No | Yes | 16.00 | 5.93 | Yes | Yes | |
| Exide Industries | No | -10.27 | -6.23 | Yes | No | Yes | 3.74 | 2.57 | No | No | |
| MRF | Yes | 31.17 | -6.58 | Yes | Yes | No | 11.73 | 12.85 | Yes | Yes | |
| Samvardhana Motherson | No | -23.40 | -21.68 | No | No | Yes | 8.35 | 6.27 | Yes | Yes | |
| Sona BLW Precision | Yes | 12.12 | -1.09 | Yes | Yes | Yes | -2.19 | -3.80 | No | No |
End
Edited by Vandana Hingorani
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