A global investment firm has 'SELL' rating on 70% of Indian car makers because sales may not pick up speed
- With car sales being woefully slow, Indian
auto manufacturersare going to see the weakest Q1 results in a decade, say analysts.
- A CLSA report has said that Q1 EBITDA is going to fall by an average of 28% for all auto companies.
Maruti Suzukicut production for the fifth consecutive month in June due to lack of demand.
AdvertisementIndian automakers have been witnessing a massive slowdown in sales and that has resulted in stock analysts calling it the first quarter, their toughest quarter in a decade. CLSA, the capital markets research firm, has said that first quarter results for FY 20 is likely to be the weakest in a decade for the auto sector because of depressed volumes and margin pressure.
The report further mentions that for the first quarter, pre-tax profits would fall by 28% year-on-year for the entire industry. While Maruti and Ashok Leyland could see their quarter’s profits decline by 35-43%, Eicher,
“We remain cautious on the sector and have sell ratings SELLs on 70% of our stock coverage; on a relative basis, we continue to prefer Maruti , Eicher, and Motherson,” said the report.
One of India’s biggest car manufacturers, Maruti Suzuki had reported a decline by 21% in its car sales for May. In June, it fell again by 14%. In fact, the auto manufacturing giant cut production for the fifth consecutive month in June due to lack of demand. Its shares fell too, shedding ₹7,000 crore in market value in early July.
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