Q4 results preview: Automakers may report strong volume-led growth

Auto companies are likely to post strong volume-led growth in Q4FY26, but rising input costs and commodity inflation are beginning to weigh on margins across segments

Analysts see Q4FY26 revenue growth for automotive companies in the range of 17-20 per cent, underpinned by double-digit volume expansion across passenger vehicles (PVs), two-wheelers (2Ws), and commercial vehicles (CVs). 

Demand has been supported by improving affordability, following the goods and services tax (GST) rate cuts, healthy financing availability, festival tailwinds and better realisations driven by lower discounting and a favourable product mix. 

However, profitability trends remain mixed. Earnings before interest, taxes, depreciation and amortisation (Ebitda) growth are seen broadly around 12-20 per cent year-on-year (Y-o-Y) for the sector. 

However, there are some outliers on either side, as operating leverage, scale benefits and favourable currency partly offset rising input costs. On margins, some brokerages expect marginal expansion of around 50-70 basis points (bps), led by mix and leverage. Others flag flat to slight contraction (up to around 20 bps decline). This is due to commodity inflation, indicating that cost pressures are beginning to cap the benefits of strong volume growth. 

Building on this, brokerages remain aligned that demand momentum in Q4FY26 has been broad-based across segments, though the drivers vary. 

According to Nuvama, 2W volumes rose around 25 per cent, supported by improved affordability post GST cuts and better financing access and exports also grew over 25 per cent. 

PV volume rise was relatively modest around 12 per cent Y-o-Y domestically but exports surged over 30 per cent, aided by favourable currency and mix improvement. 

CV volumes increased around 20 per cent, driven by improved freight availability and financing, while tractors remained the standout with around 33 per cent growth. It was on the back of strong rabi sowing and rural support measures. 

Motilal Oswal’s channel checks are similar, pegging aggregate industry volumes at around 23 per cent Y-o-Y, with 2Ws up 25 per cent, PVs 15 per cent, CVs 22 per cent and tractors 33 per cent. This underscores that the quarter’s growth has been volume-led rather than purely price-driven. 

At a company level, the growth is expected to translate into strong top-line prints. 

Nuvama estimates Maruti Suzuki’s revenue to grow around 28 per cent, while Centrum pegs 27 per cent Y-o-Y revenue growth with Ebitda growth estimated at 46.5 per cent and margins expanding to 12.1 per cent (up 161 bps). This is driven by better mix and lower discounting. 

In two-wheelers, Bajaj Auto is expected to post around 29 per cent revenue growth with Ebitda growth of around 30-35 per cent, while TVS Motor’s revenue is seen rising around 32 per cent, aided by both domestic and export strength.

Hero MotoCorp is expected to see mid-20 per cent revenue growth, though margin expansion remains modest, supported mainly by scale. 

In PVs, divergence is sharper. While Maruti and Mahindra & Mahindra are expected to deliver strong double-digit growth, Hyundai is likely to underperform with mid-single-digit revenue growth (around 6–7 per cent) and Ebitda decline of over 20 per cent. It was hit by higher commodity costs, elevated marketing spends and costs related to its Talegaon plant. 

Tata Motors’ India PV business is expected to see a sharp 53 per cent revenue jump, but this is offset by weakness in Jaguar Land Rover, where margins are likely to compress by around 500 bps. It is due to tariffs, and lower scale, dragging consolidated profitability. 

In CVs, Tata Motors’ CV division and Ashok Leyland are expected to deliver high-teens to mid-20 per cent revenue growth, supported by strong volumes. Kotak Institutional Equities estimates overall original equipment manufacturers (OEM) revenues to grow around 17–19 per cent, with Ebitda rising around 26 per cent (ex-Tata Motors), led by operating leverage and mix.

On the cost side, the narrative turns more cautious. Motilal Oswal highlights that input cost inflation has picked up sharply in Q4, though the full impact is likely to be visible from Q1FY27 due to lagged contracts.