Auto Stocks Outlook for the week – 25 to 29.05.2015
Negative
bias seen; Tata Motor, M&M earning eyed
( www.rupeedesk.in )
Stocks
of major automakers are seen trading with a negative bias next week due to a
likely
correction
in Nifty levels, the Jan-Mar financial results of Tata Motors Ltd and Mahindra
&
Mahindra
Ltd, to be detailed on Tuesday and Friday respectively, would be eyed. Nifty is
expected to correct during the coming week after rising through the past seven
trading days and the automobile sector, being the first one to fall, is
expected to lead the downward trajectory this time as well.
Among
automakers declaring their respective financial results for Jan-Mar during the
coming
week
are Tata Motors and M&M. Tata Motors is likely to report a consolidated net
profit of 41.20 bln rupees for Jan-Mar, up 5% on year. Net sales for the
automaker are seen at 672.33 bln rupees, up 4% on year. The rise in sales would
be supported by factors such as a recovery in medium and heavy commercial
vehicle sales in India, a better product mix in its high-profit arm Jaguar Land
Rover and a positive impact of foreign exchange movement. Expect standalone
business likely to report 0.9% (fall in net profit). Standalone numbers showing
improvement on operating leverage benefit from improving M&HCV/car sales.
Tata
Motors' counter is seen as one of the few trading with a positive bias during the
week, mainly in anticipation of a growth in net profit, supported also by its
standalone operations
this
time around, as JLR volumes declined on year. M&M, which is scheduled to
detail its results on Friday, is expected to report a net profit of 5.68 bln
rupees, down 37% on year. Net sales, too, are seen down on year for M&M.
The company is expected to report an 18% fall in net sales to 88.36 bln rupees.
A
fall in volumes of passenger vehicles and tractors is seen as the reason behind
a dismal set of numbers likely to be reported by Mahindra & Mahindra.
M&M continues to face pressure on its UV (utility vehicle) business, led by
weak industry demand and higher competitive pressures. Tractor demand is also
likely to be subdued due to lean season in domestic market. In line with the
numbers, M&M's counter is seen having a negative outlook for the week.
