The auto industry posted a healthy sequential rebound (total industry volumes up ~35% QoQ) on the demand front post state-specific unlocking in Q2FY22. All segments ex-PV (impacted by chip shortages) posted double-digit QoQ volume increases with CV space outperforming as a whole. Operating leverage gains due to higher volumes are expected to have more than offset elevated commodity costs, with the universe thereby seen recovering from lower margin profile in Q1FY22. We expect our coverage universe (ex-Tata Motors) to report 8.7% QoQ topline growth & ~60 bps QoQ EBITDA margin increase to 10.7%, with PAT growth of 35.7% QoQ. Notably, YoY, performance still looks muted (ex-CV space) due to pent up demand witnessed post Covid first wave in Q2FY21.
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