Maruti is Expected to show max growth in 4th quarter

The Dec 2010 quarter is expected to give some interesting outcomes with five top notch companies, Tata Motors, Mahindra & Mahindra, Maruti Suzuki, Bajaj Auto and Hero Honda to side 50 per cent growth in net profit. For this financial period, a growth of 21 per cent is expected in Net Sales of Automobile sector.

Among all the complicated figures, the good news is for Tata Motors which is speculated to achieve a maximum growth in profits. The star products from company's stable is going to be from its co brand Jaguar and Land Rover (JLR). Last quarter was a boom for the company by achieving 9x groeth in net profits. The combined figures from top five players show 115 per cent YoY on making sales grow by 31.6 per cent.

The other major players witnessed good demand in market resulting in Maruti Suzuki pointing YoY growth of 28.2%.

coming to the segment which faced a draggy sales in last quarter, the commercial Vehicle segment, was not able to repeat the success it achieved in the first quarter. The major reason behind this failure was the impose of new emission norms.

On YoY basis, the automobile sector is expected to face a downfall of 300 basis points owing to the continuous increase in the input costs. The concerning note does not end here as the financing schemes for automobile sector will also follow an upward trend which will result in the incapability of buyers to purchase.

The response of all automobile major to the increasing input cost has been in the face of increase in the product prices with efforts to reduce the input cost. A contraction of 300 to 400 points is claimed by Maruti Suzuki in the operating margin as against the last years figure.

A 10.3 P\E ratio is maintained by the Indian auto major, Tata Motors in the financial year which is a good amount when the growth prospects are considered. A P/E of 16.1 and 15.9 is maintained by Bajaj Auto and Maruti Suzuki respectively.

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