Q4FY22 Result Preview - Auto and auto ancillary - ICICI Direct

A revival in economic activity, cyclical recovery underway in the CV space, pick-up in retail sales volume (March 2022 retails at ~93% of pre-Covid levels), robust demand in PV segment amid improving chip supplies and interim rise in key raw material & crude prices due to geopolitical crisis were the key highlight for Q4FY22E. Total industry volumes in Q4FY22 are expected to decline ~3.6% QoQ with 2-W space continuing to play spoilsport with volume decline pegged at ~8% QoQ. Rest all categories (except tractors) witnessed healthy double digit sequential growth with CV space outperforming the pack with 20%+ QoQ growth. Building in conservative estimates we build in ~50 bps decline in gross margins for Q4FY22E amid management commentary last quarter suggesting low under-recoveries, however sequential uptick in volume is expected to largely offset the same. We expect our coverage universe to report 7.2% QoQ topline growth & ~100 bps QoQ decline in EBITDA margins to 11.0%. This ensures PAT growth is expected at 3.6% QoQ. However, YoY, operational performance still remains muted due to double digit volume decline (~19%) & high margins in base quarter Q4FY22 (~15).

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Source : Equity Bulls

Keywords

Auto AutoAncillary Q4FY22 ResultsPreview ICICIDirect