TVS Motor and Bajaj Auto are expected to report strong year-on-year profit growth in the September quarter, while Maruti Suzuki and Hyundai Motor India could see earnings decline as higher input costs weigh on margins, according to brokerage estimates.
Antique Stock Broking expects TVS Motor’s net profit to rise 49% year-on-year in Q2FY27, while Bajaj Auto’s profit is forecast to increase 29.1%. In contrast, Antique estimates a 10.2% decline in Maruti Suzuki’s profit and a 21.9% fall in Hyundai Motor India’s earnings.
The divergence comes as automakers benefit from strong volumes, premiumisation and improved product mix, but face pressure from commodity costs and freight expenses.
TVS, Bajaj lead earnings growth
In its October 9 preview, Elara Securities expects TVS Motor’s revenue to grow 36.3% year-on-year and adjusted profit to increase 50.5%. It forecasts Bajaj Auto’s revenue and adjusted profit to rise 26.9% and 27.2%, respectively.
Antique Stock Broking’s October 7 estimates are broadly in line on the two companies, projecting revenue growth of 38.8% and profit growth of 49% for TVS Motor. For Bajaj Auto, it expects revenue to rise 27.2% and net profit to increase 29.1%.
Axis Securities, in its October 8 preview, expects revenue growth of 36.3% and profit growth of 45.3% for TVS Motor. For Hero MotoCorp, however, Axis projects revenue growth of 18.2% and profit growth of 9%, reflecting a more modest earnings expansion.
The brokerages attribute the stronger performance expected from TVS and Bajaj to healthy volumes, product mix and export realisations. Elara said rupee depreciation should provide some relief from margin pressure for export-heavy two-wheeler makers such as TVS Motor and Bajaj Auto.
Maruti, Hyundai face margin pressure
The outlook is weaker for the passenger vehicle makers. Antique expects Maruti Suzuki’s revenue to rise 25.3%, but its net profit to fall 10.2%. It forecasts Hyundai Motor India’s revenue to increase 17.1%, while net profit declines 21.9%.
ACMIIL Institutional Research, in its October 12 preview, estimates Maruti Suzuki’s revenue to grow 28.3%, while net profit falls 7.9%. It expects the company’s EBITDA margin to contract 347 basis points year-on-year to 8.5%, citing higher material costs.
“Margins may not see much QoQ improvement yet,” ACMIIL said, noting that softer prices for some commodities, including aluminium, could be offset by increases in steel and rubber costs.
Axis Securities also expects pressure on Maruti’s profitability, forecasting a 10.5% year-on-year decline in profit. It expects revenue to rise 29.8%, supported by a 26.5% increase in volumes and a higher contribution from utility vehicles.
Input costs remain a key concern
The pressure on margins is a common theme across the previews. Axis Securities expects revenue, EBITDA and profit for its auto OEM coverage universe to grow around 28%, 16% and 12%, respectively. However, it said the “margin recovery in Q2FY27 is likely to remain gradual” as elevated raw material costs and supply-chain uncertainties constrain profitability.
Antique Stock Broking expects auto companies to deliver topline growth of around 28%, but forecasts OEM EBITDA margins to contract by about 237 basis points year-on-year due to commodity headwinds and higher freight rates.
Elara Securities said calibrated price hikes have not fully offset earlier commodity cost increases, leaving margins under pressure in Q2 and Q3. It also flagged the possibility of slower growth in the second half as a high base could moderate headline growth.
ACMIIL expects margins to improve only modestly sequentially as companies pass on input-cost increases. Demand trends and the ability to recover higher costs through pricing will remain key monitorables as the earnings season progresses.
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