Ukraine crisis: Brokerages and rating agencies pare estimates for auto cos

While commodity cost inflation will hurt margins, probable increase in fuel prices can potentially lead to demand deferment across segments, according to Motilal Oswal

An imminent hike in fuel prices, coupled with expected supply chain disruption triggered by the global instability, is making brokerages and agencies bearish on the auto sector.
 

Over the last one week, amid a raging war in Ukraine, leading brokerages have pared the earnings’ estimates of several key auto firms. Even credit rating agencies have revised their outlook on the sector downward.
 

While commodity cost inflation will hurt margins, probable increase in fuel prices (15-20 per cent) after the state elections can potentially lead to demand deferment across segments, according to Motilal Oswal’s latest research report.
 

Input cost and fuel