Q2 earnings preview: Low demand, high discounts may hit auto players

Owing to a weak festive season coupled with the challenges related to the switchover to BSVI norms, analysts expect pain for the auto firms to linger on for the reminder of the financial year

Most auto companies are expected to report another dismal performance for September quarter (Q2) of 2019-20, as poor demand and steep discounts singed their earnings.

The average of the brokerages, including Kotak Securities, ICICI Securities, Prabhudas Lilladher, and Antique, estimates that net profit of top eight companies in the auto universe (including the consolidated earnings of Tata Motors) to see a 46.2 per cent year-on-year (YoY) drop for Q2FY20. This will be the sixth consecutive quarter of a double-digit decline in net profits, as domestic sales in India’s domestic auto market remain in a negative terrain for over a year