BMW has recently lowered its EBIT margin forecast for 2024 to between 6% and 7% from the previous range of 8% to 10%. The EBIT margin for the motorcycle segment is also likely to be in the same range as the previous range of 8% to 10%.
Weak demand in the Chinese market and problems with the braking system supplied by Continental are among the reasons cited by BMW for cutting its forecasts.
Analysts expect stocks such as Samvardhana Motherson to see some impact on their operations in the second half of the current financial year due to BMW’s guidance cut.
Samvardhana Motherson has 5% of its consolidated revenue coming from BMW, while the Chinese market comprises 11% of its revenue.
For companies like Rico Auto, BMW contributes almost 11% of their revenue, while for Suprajit Engineering, that figure stands at 4%.
Other companies that have exposure to BMW include Ceat, Goodluck India, Minda Corp and Apollo Tyres.
Weakness in the EU and Chinese markets had already been highlighted by JLR management, but JLR’s retail sales have been better compared to its peers and analysts believe the company’s 3.5% year-on-year revenue growth forecast is safe.
However, brokerage firm UBS believes it sees a greater downside risk from a margin decline at JLR and within the Indian passenger vehicle business for Tata Motors in the event of any significant shortfall in performance.
Therefore, UBS has maintained its ‘Sell’ rating on Tata Motors with a target price of ₹825.
Samvardhana Motherson shares are currently trading 2.5% lower at Rs 184.81. However, so far in 2024, the stock is up 75%.
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.