Auto Sector Q2 Earnings Preview - Supply-Side Issues To Hurt Performance: Motilal Oswal
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Motilal Oswal Report
Demand evolution has been a mixed bag since the lifting of the second Covid-19 related lockdown restrictions from mid-June 2021.
Demand has bounced back quickly for passenger vehicles, but two-wheelers have seen a slower recovery.
Commercial vehicles are recovering gradually, but demand for tractors has been sluggish.
The semiconductor shortage has hurt supplies for passenger vehicles, premium two-wheelers, and light commercial vehciles, which will potentially impact the upcoming festive season.
Prices for core commodities have seen some stabilisation since Q1 FY22 and a 20-50% reduction in the precious metals basket.
We expect the same to impact with some lag in Q2 FY22E and then stabilise thereafter.
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