Indian Auto OEM Industry's Gross Margin At Decade High: CLSA

Aided by weak commodity prices and some recovery in pricing power, the Indian auto OEM industry posted a decade-high gross margin, notes CLSA.

However, Abhijeet Naik and Nitij Mangal of CLSA in their August 27, 2015 research report on “Indian Autos” point out that in two-wheelers, Ebitda margins are still below their previous peaks.

Indian auto OEM’s gross margins will rise higher

Naik and Mangal point out that in 1QFY16, the Indian auto industry’s gross margin at 30% was at the highest level in the last 10 years. The analysts reckon the improvement has been primarily driven by two factors, viz.: benefits of weaker commodity prices have started to flow through and pricing power has started to improve with incrementally better demand...