Automobiles – Apr-Jun’26 Earnings Preview – Strong Volume Momentum but Margin Pressure Lingers
Published on 08 Jul 2026
Q1FY27 saw double-digit wholesale auto volume growth even as higher commodity costs, supply chain disruptions and manpower shortage impacted the industry. The West Asia conflict has led to international logistic challenges and the increase in fuel prices has prompted customers to shift to EVs. New EV model launches provided further tailwind as EV penetration increased strongly. Weaker INR should aid companies with higher export exposure. Domestic retail demand remained strong even as most OEMs took price increases in the range of 1%-3% and are in process of increasing capacities to service the demand. Even as some commodities saw corrections toward the end of Q1, margins are expected to be evidently impacted, partially offset by higher operating leverage, price increases, and stronger exports. Some softness in rural demand was visible toward the quarter end due to delayed and deficient monsoon and inauspicious period observed in many regions across the country. El Nino impact and input costs will be key monitorables going ahead. Top picks amongst our coverage are M&M and TVS.
