Recovery for the automobile sector after lifting of lockdown has been stronger than expected. Brokerage firms are optimistic, but they advise investors to remain cognizant of retail auto sale risks.
Some Financial Services predicts that the second quarter (Q2) of FY 2021 could mark the beginning of a margin recovery phase after eight straight quarters of year-on-year (Y-o-Y) decline in earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins.
“This recovery phase can be attributable to the pent-up demand, positive agri-economics, and a moderate shift from public to private transport. Demand has largely normalised for two-wheelers and passenger vehicles in Q2 FY 2021.” Jinesh Gandhi, Deputy Head of Research, Motilal Oswal Financial Services.
“Some sectors have shown signs of recovery in the second quarter. Growth in passenger vehicles and two-wheeler segments is positive, although on a very low base,” said Rajesh Menon, Director General at SIAM.