Auto companies' profit may decline by 52% in September quarter, Maruti and Tata will see the worst effect

Auto Companies Profit May Decline By 52% In September Quarter

The impact of the semiconductor shortage will be visible on the profits of auto companies. The financial results for the September quarter have started coming in. It is estimated that the profit of the auto sector may decline by 52% in September 2020 to Rs 35,174 crore in September 2021.

Advice on buying shares

However, despite this, the brokerage house has advised buying the shares of most of the companies. This is because they believe that as soon as this problem ends, the profit of the companies will improve and its positive effect will be visible on the shares of the companies.

There was a decrease in sales in September

Recently, when the sales figures of vehicles came out in the month of September, the sales of most of the companies had decreased. Maruti's sales stood at 86,380 in September as against 1.47 lakh in September 2020. Mahindra had a 21.7% drop in sales. It sold 28,112 vehicles in September 2021 while it sold 35,920 vehicles in September 2020.

Profits can drop drastically

Brokerage houses predict that the profits of auto and auto parts makers may decline drastically. A dozen companies could see their profits fall 97% year-on-year in the second quarter. Due to the shortage of semiconductors, the production of auto companies has halved. According to analysts, the shortage of semiconductors has adversely affected the supply of personal vehicles, premium two-wheelers, and light commercial vehicles (LCVs). This is also affecting the sales of the companies during the festive season.

Strong demand for personal and commercial vehicles

Yes, Securities said the demand for personal and commercial vehicles is very strong. But the global chip shortage has affected the companies' sales in August and September. The impact of 40-45% reduction in volumes of these companies has been shown. In September, the big companies had announced a reduction in their production.

High demand for personal vehicles

Compared to the last festive season, personal vehicle inquiries have increased by 18-20% this time. Dealers or companies with less than 2 weeks of inventory. Motilal Oswal Financial Services believes that the demand for personal vehicles has increased rapidly. But the recovery in demand for two-wheelers is slow. There is an increasing demand for tractors.

Maruti's profit may drop by 45%

The brokerage house estimates that Maruti Suzuki's profit may decline by 45.2% on a year-on-year basis. Its profit can be Rs 751.20 crore. Tata Motors may present a loss of Rs 3,146.60 crore. Although its stock has increased by more than 25% in 3 days. Ashok Leyland may present a loss of Rs 95 crore.

Hero Moto Corp's profit fell by 28.3%

Two-wheeler maker Hero Moto Corp's profit may decline by 28.3%. That is, its profit can be close to Rs 683 crore. Escort profit may fall by 34% to Rs 152 crore. Bajaj Auto, however, may give the same profit as the same quarter last year.

CEAT may lose 73%

Talking about auto parts makers, Ceat may have a loss of 73% in the September quarter. Its profit on an annual basis can be Rs 50 crore. Amar Raja Batteries may see a decline in profit of 28%. Its profit can be Rs 146 crore. Motherson Sumi's profit is expected to be Rs 224 crore. Its profit can drop by 40%.

Tata Motors may have a loss of 4,412 crores

Brokerage house Emkay Global estimates that profits of auto companies may fall in the September quarter. Regarding Tata Motors, it has been said that its loss can be Rs 4,412 crore. Ashok Leyland may have a loss of Rs 108 crore. Whereas Maruti's profit can be reduced by 50% to Rs 687 crore. The gains of companies like Motherson Sumi, Apollo Tyres, Amar Raja, Minda, and Exide could fall up to 97%.

Yes Securities also forecast losses

Yes, Securities has estimated that Maruti's profit may fall 70% on a year-on-year basis. Hero MotoCorp's gain may be 40%, Escort's 38%, Mahindra & Mahindra's gain 24%, and Eicher's gain may be 19% lower. Tata Motors may show a loss of Rs 5,501 crore.

Icra downgraded

Rating agency Icra has downgraded the auto parts industry. It said the growth of the auto parts industry could be 17 to 20%. However, it has seen a more downgrade of 3% than the earlier estimate. Because the reason for the shortage of semiconductors has become a big problem. The rating agency said that the operating profit margins of auto parts makers will be below normal levels.

According to this, auto parts makers can invest Rs 12,500 crore in the financial year 2021-22. Whereas in the financial year 2020, he had invested Rs 18,200 crore. That is, companies can reduce investment.