New Delhi, August 19 (IANS). Indian automobile manufacturers have delivered a strong performance in Q1FY27 despite cost pressures. During this period, to preserve margins, many two-wheeler manufacturers resorted to price increases and cost control. This information was given in the report released on Wednesday.
According to analysis by HSBC Global Investment Research, most two-wheeler manufacturers (OEMs) reported little decline in margins during the quarter, suggesting they managed rising input cost pressures better.
It was told in the report that the quarterly performance of commercial vehicle manufacturing companies was good. It remained among two-wheeler and passenger vehicle manufacturing companies.
The report cites commodity cost as a main challenge for the sector. Although prices have declined slightly in the current quarter and input costs have remained broadly stable, these are putting pressure on profits and to ease cost pressures, most automakers have raised prices in July and August.
According to the report, this increase in prices should support margins to some extent, although its benefit will depend on the change in demand and the pace of decline in commodity costs.
Analysts at the global brokerage said that despite frequent price increases, demand for all types of vehicles remains good and mid-single-digit growth is expected in the second half. This is better than the low-single-digit growth previously predicted for most OEMs. HSBC also said that now the concerns related to monsoon have reduced somewhat.
However, the report warned that further price increases and a higher base for comparison could pose challenges to growth in H2FY27 and FY28, especially if consumers' purchasing power reduces.
On valuations, HSBC said stocks under its coverage are trading at a premium to their historical averages, with two-wheeler makers looking significantly more expensive than passenger vehicle makers.
–IANS
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The brokerage said that over the next one-two years, it will prioritize companies that offer reasonable valuations, diversified and secure revenue profiles and long-term structural growth drivers.