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Informist, Tuesday, Aug. 26, 2025

 

By Anand JC

 

NEW DELHI – Automobile and automobile component makers' aggregate bottom line contracted year-on-year for the fourth consecutive quarter in the June quarter and missed analysts' expectations. The June quarter, which is traditionally a weak quarter for automobile companies, saw key metrics come under even more pressure due to disappointing sales, analysts said.

 

The aggregate net profit of 18 automobile and automobile component companies fell 17% on year for the June quarter. This was poorer than analysts' expectations of an 11?ll, and markedly worse than the Nifty 200 companies' aggregate bottom line growth of over 7%. Excluding one-time income and expenses, the automobile companies' net profit contraction moderates to a 3.5?ll, noticeably lower than the 10% growth in Nifty 200 companies' net profit adjusted for one-time items.

 

The bottom line growth of eight companies in the sector – Bharat Forge Ltd., Bosch Ltd., Eicher Motors Ltd., Escorts Kubota Ltd., Exide Industries Ltd., Mahindra & Mahindra Ltd., TVS Motor Co. Ltd., and Ashok Leyland Ltd.— exceeded the Nifty 200 companies' aggregate net profit growth for the latest quarter. However, adjusted net profit growth of only seven companies -- Apollo Tyres Ltd., Bosch, Escorts Kubota, Exide Industries, M&M, TVS Motor, and Ashok Leyland — exceeded Nifty 200 companies' overall bottom line adjusted for one-time losses and gains.

 

Among original equipment manufacturers, Tata Motors Ltd. lagged the most as its profitability was hit by weakness in passenger vehicle segment and in the Jaguar Land Rover unit. The 63% on-year contraction in the Safari maker's bottom line for the June quarter moderates to a 29?ll if one-time items are excluded.

 

These 18 companies' aggregate top line for the quarter under review grew 3.6% on year, better than analysts' expectations of a 1.8% contraction. However, their revenue growth was still lower than that of Nifty 200 companies, which increased 5.6% on year.

 

This was the weakest June quarter in terms of revenue growth for the 18 firms since 2021-22 (Apr-Mar), based on available data. The 3.6% revenue growth is also the weakest expansion in top line in the past three quarters. Amid weak despatches, companies' revenue growth was actually driven by a combination of price hikes and product mix, analysts said.

 

"Automobile companies' profit contracted, but revenue grew because of pricing action taken by a lot of companies during Q1," Ravi Gupta, an analyst covering the sector at InCred Capital said.

 

This single-digit revenue growth was due to a change in the "product mix" of companies' portfolio, Neel Doshi, Senior Research Associate covering the sector at Elara Securities, said. "If you see, companies are selling more utility vehicles which cost more. Even in commercial vehicles you are seeing higher sales of high-tonnage vehicles," Doshi said.

 

This price-led growth in automobile companies' top line is evident in the fact that the average selling prices of majority original equipment manufacturers improved year-on-year in the June quarter. Eight out of ten automakers part of Nifty 200 reported a year-on-year growth in the average selling price for the June quarter, Kotak Institutional Equities said in a note. Four companies' realisation per vehicle grew by mid-single digits.

 

INPUT PRICE PRESSURE

Total aggregate expenses incurred by these 18 firms grew just over 5.4% for the reporting quarter. Raw material costs form the bulk (bulk is significant) of these companies' overall cost, at around 64% of overall expenses on an aggregate basis.

 

The cost of materials consumed by the 18 companies rose nearly 8% for the reporting quarter, faster than the growth in overall expenses. While this is lower than the 16% on-year growth in input costs in the year-ago quarter, this is the highest since then. "Prices of commodities haven't softened as expected, they've remained stable," Doshi said.

 

The aggregate raw material-to-sales of the 18 companies was 59% in the June quarter, much higher than the 55% in the March quarter and the 57% in the year-ago quarter. A higher reading of this key performance indicator suggests that raw material costs are taking a larger part of the company's top line.

 

This uptick in raw material prices weighed on the earnings before interest, taxes, depreciation, and amortisation of the 18 auto firms. The aggregate EBITDA of the 18 companies fell a staggering 14% on year, according to data from Kotak and company filings. However, excluding the 37?ll registered by Tata Motors, the fall reverses to a 1% gain.

 

Among the original equipment manufacturers, the EBITDA of Mahindra & Mahindra Ltd. and TVS Motor Co. Ltd. grew 21% and 32% on year, each, while Sona BLW Precision Forgings Ltd.'s EBITDA fell over 19%, the second-worst EBITDA reading after Tata Motors among automobile companies.

 

The poor performance of automobile companies trickled down to component makers as well, Doshi said. "Tyre companies were under pressure as demand did not flow from original equipment makers," he said.

 

According to Doshi, auto component companies with exposure to domestic two-wheeler makers fared well during the quarter. However, forging companies had a muted June quarter due to an impact of tariffs coupled with weak demand in the international markets. "Globally exposed companies haven't performed well," he said.

 

TRANSPORT SECTOR

The transport sector as a whole, comprising 21 firms involved in operations related to automobile, auto ancillary, ports, airports and airport infrastructure, recorded a profit contraction for the fourth consecutive quarter. Their aggregate bottom line fell just over 15% year-on-year, which moderates to a 5?ll on exclusion of one-time items – both worse than Nifty 200. Analysts had expected the sector's profit to fall 11%.

 

Their revenue growth of 4.3% on year was the slowest in the past three quarters, again underperforming the Nifty 200, but exceeding analysts expectations of 0.6% contraction.

 

Total expenses grew just over 6% for the reporting quarter as cost of materials consumed grew at a four-quarter high year-on-year. Staff costs, which form nearly 10% of overall costs, grew over 9%, the lowest since June quarter of 2022-23 (Apr-Mar).

 

The following table shows the performance of the 18 companies in the transport sector vis-a-vis the consensus estimate for each company as well as against the consensus estimate for the sectors and the Nifty 200 index:

 

June quarter	PAT growth (Actual)	PAT growth (Estimate)	Revenue growth (Actual)	Revenue growth (Estimate)
Nifty 200 (YoY)	9.95%	10.30%	5.64%	2.11%
Transport (21 companies)	-4.99%	-11.12%	4.30%	-0.60%
Auto & auto ancillary companies (18 companies)	-2.62%	-13.21%	3.25%	-3.73%

 

Company

PAT beat analysts' estimate for co

Adjusted PAT growth %

Adjusted PAT growth estimate %

PAT beat transport sector growth

PAT beat Nifty 200 growth

Revenue beat analysts' estimate for co

Revenue growth %

Revenue growth estimate %

Revenue beat transport sector growth

Revenue beat Nifty 200 growth

Adani Ports

YES

1.73

-8.97

YES

NO

YES

20.72

14.93

YES

YES

Apollo Tyres

YES

11.88

-6.55

YES

YES

NO

3.57

5.42

NO

NO

Ashok Leyland

NO

12.97

15.11

YES

YES

NO

1.47

2.05

NO

NO

Bajaj Auto

YES

5.41

1.99

YES

NO

YES

5.50

3.17

YES

NO

Bharat Forge

NO

-18.45

-12.99

NO

NO

NO

-9.98

3.17

NO

NO

Bosch

YES

20.17

8.68

YES

YES

YES

10.93

7.94

YES

YES

Eicher Motors

YES

9.42

3.23

YES

NO

YES

14.77

13.29

YES

YES

Escorts Kubota

YES

15.55

12.29

YES

YES

NO

-2.85

0.20

NO

NO

Exide Industries

YES

14.62

8.63

YES

YES

NO

4.57

5.94

YES

NO

GMR Airports

--

N.A.

N.A.

--

--

YES

33.43

25.42

YES

NO

Hero Motocorp

YES

0.27

-5.45

YES

NO

NO

-5.57

-3.45

NO

NO

Hyundai Motor India

YES

-8.08

-14.98

NO

NO

NO

-5.37

-2.13

NO

NO

Interglobe Aviation

NO

-20.74

-10.33

NO

NO

NO

4.73

7.85

YES

NO

Mahindra and Mahindra

YES

32.04

19.22

YES

YES

YES

25.84

24.57

YES

YES

Maruti Suzuki India

YES

1.69

-17.25

YES

NO

YES

8.11

2.58

YES

YES

MRF

NO

-13.92

-0.77

NO

NO

NO

6.82

6.97

YES

YES

Ola Electric Mobility

--

N.A.

N.A.

--

--

YES

-49.64

-58.33

NO

NO

Samvardhana Motherson

NO

-34.79

1.40

NO

NO

NO

4.66

7.90

YES

NO

Sona BLW Precision

YES

-5.68

-6.00

NO

NO

NO

-4.72

-3.79

NO

NO

Tata Motors

YES

-28.93

-40.52

NO

NO

YES

-2.52

-16.43

NO

NO

TVS Motor Co.

YES

34.86

29.76

YES

YES

YES

20.36

19.29

YES

YES

 

End

 

Data compiled by Vinod Bhovad

 

Edited by Deepshikha Bhardwaj

 

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