Auto stocks were under pressure on Thursday after Maharashtra imposed new restrictions in order to curb the rising COVID-19 cases. Automakers said that the new restrictions in Maharashtra are creating uncertainty.
Post this, the Nifty Auto index fell 2 percent in intra-day deals with all its constituents trading in the red. Eicher Motors, Bharat Forge, Maruti, Ashok Leyland, MRF, Motherson Sumi down between 2-5 percent. Meanwhile, M&M, TCS, Motor, Bajaj Auto, Hero Moto also lost around 1 percent each.
Auto manufacturers have sought clarity from the Maharashtra government over the latest set of restrictions in the state announced earlier this week. Auto companies have told the government that the restrictions have created uncertainty for the industry.
All auto manufacturers are conducting a supply chain review as several suppliers are based in Maharashtra. Component makers in Maharashtra have sought clarity on supplying orders to auto companies in other states.
Meanwhile, retail automobile sales during March 2021 fell sharply by 28.64 percent as compared to the same month last year, as per the latest vehicle registration data released by the Federation of Automobile Dealers Associations (FADA). However, auto registrations in March grew 10.05 percent as against February.
Going ahead, brokerage firm Jefferies expects aggregate revenues for the original equipment manufacturers (OEMs) that the brokerage firm has covered to grow 36 percent year-on-year (YoY).
The brokerage note stated: "The margins should contract by 110 basis points sequentially due to higher commodity prices. We expect aggregate earnings before interest, taxes, depreciation, and amortization (EBITDA) to fall 10 percent quarter-on-quarter, despite the automotive sector's 41 percent YoY growth.