Improving outlook, upgrades to keep wheels turning for auto companies

In addition to volumes, margins, too, are expected to expand

The S&P BSE Auto Index has been one of the biggest outperformers among sectoral indices over the past year with returns of 26 per cent. By comparison, the benchmarks – the National Stock Exchange Nifty50 and the S&P BSE Sensex - managed about 6-8 per cent during this period. Improving demand, falling raw material costs, and rising product realisations, led by the premiumisation of portfolios, have led to a revision of growth estimates and upgrades by domestic brokerages.

While most segments, except for tractor, put up a sluggish volume performance in February, brokerages expect multiple triggers to assist the sector.