Q3FY25 Earnings: Auto Sector Witnesses Healthy Volume Growth, Muted Profit Growth
The earnings season concluded on February 15th, with major large-cap companies across sectors reporting their Q3FY25 results. The NIFTY500 index recorded a 6.6% YoY rise in total revenues and an 18% YoY jump in consolidated net profit, reflecting a notable improvement from Q2FY25’s 2.6% YoY growth.
Auto Sector Performance in Q3FY25
Healthy Volume Growth
The auto sector saw robust volume growth, with total sales reaching 77.98 lakh units, marking a 10.8% YoY increase from 70.36 lakh units in Q3FY24.
– Two-wheeler and passenger vehicle sales grew by 12.4% and 5.9%, respectively
– Tractor segment posted an impressive 20.1% YoY growth at 2.44 lakh units
– YTD volume growth stood at 8.4% YoY, reaching 2.2 crore units compared to 2.03 crore units in the previous year.
Moderate Top-Line Growth
The NIFTY Auto index companies posted a 7.6% YoY growth in total sales, reaching ₹2.98 lakh crore, driven by strong rural demand and price hikes. The Union Budget 2025’s middle-class tax relief measures are expected to further boost demand in the coming quarters.
Muted Bottom-Line Growth
Despite strong volume growth, **profitability remained subdued** due to operational challenges like **heavy discounts and rising costs:
– PBIDT grew 3.6% YoY to ₹42,305 crore
– Net profit rose by just 1.75% YoY to ₹21,103 crore
– Q3FY25 performed better than Q2FY25, where profits remained flat.
Q3FY25 Hits & Misses
Top Performers (YoY Net Profit Growth)
– Samvardhana Motherson: +54%
– Balkrishna Industries: +47%
– Ashok Leyland: +34%
– M&M: +21%
– TVS Motors: +21%
– Maruti Suzuki: +16%
Underperformers (YoY Net Profit Decline)
– MRF: -38%
– Apollo Tyres: -32%
– Exide Industries: -22%
– Hyundai Motors: -19%
– Tata Motors: -19%
What Lies Ahead?
The NIFTY Auto index has corrected 21% from its all-time highs in September 2024, but analysts remain optimistic about future growth, citing:
– Price hikes & interest rate cuts as key industry catalysts
– Tax reliefs from the Union Budget boosting consumer demand
– Increased competition & innovation in the EV sector, with new product launches catering to the rising demand for electric vehicles
With these strong tailwinds, the auto sector is expected to rebound in the coming quarters, making it a space to watch in 2025.