Summary of Contents SHAREKHAN SPECIAL Q1FY2008 Auto earnings preview The first quarter of the current fiscal has started on a weak note for the automobile industry, as the sales volumes were affected by the rising interest rates, tightening of liquidity by the financiers and the seasonal effect of the monsoon. The two-wheeler segment was the worst affected as the sales in the 100cc segment were hit by price wars that led to stringent checks and lower loan sanctions by financiers. The commercial vehicle (CV) sales too slowed down during the quarter due to lower availability of finance as well as freight (the latter due to the monsoon). The surprise in the pack was the passenger car segment, which saw a good growth led by a number of new launches in the recent times. The operating profit margins are expected to remain under pressure for the whole sector considering the high raw material prices and increasing competition (particularly in the two-wheeler segment). We expect MUL, Ceat, Apollo Tyres and Ahmednagar Forgings to be among the lead performers in the sector in Q1FY2008. |
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