Weak Q3, analysts' downgrades show a painful road ahead for auto stocks

The worry for the sector is not limited to the domestic market

After underperforming the broader markets in CY2018, the auto sector is likely to trail the key benchmarks even in the first half of CY19. The BSE Auto Index, which fell by a third since the start of 2018, is expected to see more downgrades, given the demand headwinds. 

Amyn Pirani of Deutsche Bank, in a report last month, indicated that growth and margin expectations could continue to moderate over the next couple of quarters. 

While stock prices have corrected (auto index down 11 per cent since the start of 2019), the bank believes that there is further scope for de-rating, as valuations