*Automobiles and Auto Ancillaries:* *Q3FY14 Results Preview* *(**January 07, 2014)*
*Results Review* *Automobiles and Auto Ancillaries* n *Automobile:* Most companies under our coverage are likely to report lackluster YoY revenue growth as volumes have remained tepid. While the impact of INR depreciation in likely to be felt in this quarter on higher cost for commodities and imported content, they are likely to be partially offset by price increases taken early on in Q3. Companies reporting the highest YoY revenue growth were MSSL (+22%), TTMT (+30%) while MSSL, MSIL reported highest EBITDA growth of 51%, 45% respectively. n *Outlook:* Rural demand is expected to remain buoyant on good harvest and farm realizations while recovery in urban demand still remains elusive as per our channel checks. While signs of recovery remain elusive, hopes are high - we prefer bottom up ideas – HMCL (rural play and margin expansion), TTMT (play on global recovery and new product cycle), AMRJ (diversified business and strong revenue growth), and MSS (earnings growth). *Possible Surprises: Positive* *Company Name* *EPS* *(Rs)* *YoY gr (%)* *Reason* Tata Motors 9.1 72.3% We are factoring 10% QoQ growth for JLR which alongwith superior product /geographic mix can support operating margin at 15.8%. Existing currency hedges can offset unfavorable currency movement for the quarter Motherson Sumi 2.6 39.9% We are foreacasting stable margin for SMR/SMP operations sequentially, however positive operating leverage impact due to stronger than anticipated revenue growth can result in margin surprise *Possible Surprises: Negative* *Company Name* *EPS* *(Rs)* *YoY gr (%)* *Reason* Ashok Leyland -0.7 NA Margins could surprise negatively given (a) continued higher discounting can further impact realizations and (b) negative impact of operating leverage *Click here to read report:* *Results Review <http://emkayglobal.com/downloads/researchreports/AutomobilesQ3FY14ResultsPreview.pdf>* Thanks & Regards, Emkay Equity Advisory | *Emkay Global Financial Services Ltd.* | www.emkayglobal.com 7th Floor, The Ruby, Senapati Bapat Marg, Dadar (W), Mumbai– 400 028| Board No.: +91-22-66121212 | Fax : +91 22-6612 1299 -- CA. Rajesh Desai -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send email to [email protected]. Visit this group at http://groups.google.com/group/globalspeculators. For more options, visit https://groups.google.com/groups/opt_out.
