Brokerages see margin expansion at auto firms as outlook turns positive

Higher volumes and softer raw materials to drive expansion

Brokerages expect margins of auto companies, particularly passenger vehicle makers, to expand in the quarters ahead due to softer raw material prices and higher volumes, as the chip shortage eases in the third quarter. Many of the companies have seen an upward revision in their estimates by the brokerages, as a result.

The optimism for the quarters ahead also comes from a very positive management commentary and improved outlook. However, benefits of lower steel and precious metal prices are being neutralised by an increase in the price of crude derivatives.

Car market leader Maruti Suzuki India will be a key