Earnings headwinds for export-oriented auto ancillaries like Bharat ForgeBSE -2.25 % and Motherson SumiBSE -1.68 % refuse to abate due to deteriorating vehicle demand from key customers in developed countries.
The impact is evident from the March quarter numbers and management commentaries. Multiple problems faced by leading truck and car makers have led to a wide gap between projected and actual revenues of Indian makers of auto parts. Thus, the risk of earnings downgrade, high for Bharat Forge and Motherson Sumi, could further shrink their price-earnings multiples.
Bharat Forge, India's leading forgings company, has suffered 27 per cent fall in export revenues in the March quarter. The commercial vehicle segment, which accounts for nearly half of the total export revenues, has been severely hit due to inventory destocking by its key customers in the US.
Source:economictimes.indiatimes.com
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