Sequential growth is expected to be more modest, reflecting a stabilising operating environment following the festive-season boost.
Volumes are likely to be the key driver this quarter. Most analysts expect volume growth in the mid-teens, aided by festive demand and recovery in rural markets. HSBC expects overall volumes to be flat quarter-on-quarter but higher by around 16% on a YoY basis. Kotak Equities also builds in 16% YoY volume growth, driven by strong festive trends.
Pricing and product mix are expected to offer incremental support. HSBC notes that discounts were flat sequentially, while the company took a price hike of about 50 basis points during the quarter. Kotak expects average selling prices to rise 2–2.5% YoY, helped by a richer mix, including a higher share of exports and scooters.
Motilal Oswal adds that discounts were lower during the festive season and that the company implemented a sharp 10% price hike on electric vehicles from early December, which should aid realisations.
On margins, expectations are largely stable to mildly positive. HSBC expects EBITDA margin to remain flat quarter-on-quarter at around 15%, as benefits from pricing and volumes are offset by competitive pressures.
Motilal Oswal also expects margins to remain broadly stable QoQ, with operating leverage benefits likely to be neutralised by higher input costs, especially precious metals, and increased advertising spends.Kotak Equities is slightly more optimistic, expecting EBITDA margin to expand by about 60 basis points YoY to 15.1%, driven by operating leverage from higher volumes. Nuvama also expects margin expansion on a YoY basis, supported by better scale and mix.
Segment-wise, some pressure points remain. HSBC highlights a sequential decline in the economy segment market share by about 70 basis points and a sharper 110 basis points drop in scooters. However, the brokerage points to sustained recovery in the entry-level motorcycle segment and flags the upcoming Splendor 125cc launch as an important trigger to watch.
Electric vehicles remain an area of focus. HSBC notes a supply ramp-up in Vida, Hero’s EV brand, while Motilal Oswal factors in the recent price hike in EVs as margin-positive, albeit with near-term volume sensitivity.
From an earnings perspective, healthy volumes are expected to translate into steady profit growth. Motilal Oswal expects PAT growth of about 13% YoY, slightly below the street average, reflecting its conservative margin assumptions. Overall consensus, however, points to mid-to-high teens profit growth.
Looking ahead, analysts say commentary on demand outlook, rural recovery trends, and the launch timeline for new models, particularly in the 125cc category, will be closely watched.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)