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Economic Times
an hour ago
- Economic Times
Auto ancillary stocks shift into top gear but caution lights flash
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Auto ancillary companies have generated higher investor interest over the past month amid buoyancy in the broader market. However, investors need to be cautious since the sector may face pressure due to muted demand for commercial and passenger vehicle (CV and PV) demand. Of the 22% increase posted by the ET-Auto Ancillaries index in the past three months, 13% was in one month, reflecting improved traction in these a sample of 22 auto component companies , half have posted year-on-year revenue growth in the March quarter in double-digits. However, only eight of them have recorded double-digit growth in net profit. While seven companies posted double-digit growth in operating profit before depreciation and amortization (EBITDA), operating margin expanded for eight two-wheeler companies reported a slower volume growth in the second half of FY25 after a strong growth in the first six months according to Motilal Oswal Financial Services (MOFSL). Tractors was the only segment that witnessed a strong demand automobiles sector saw earnings downgrades for FY26 as margin may take a hit amid rising input costs and tepid growth visibility. 'The recent appreciation of the rupee against the dollar is a key monitorable for exports-focused companies. Given these factors, FY26 is expected to be a year of modest earnings growth for most companies under our coverage,' said margin outlook for global original equipment manufacturers (OEM) adds to the uncertainty. According to Elara Capital, top international auto makers including Mercedes-Benz, Porsche and Ford have either downgraded or suspended guidance for 2025, citing tariff risks, market share loss in China, and margin headwinds. This may impact Indian auto parts suppliers with global linkages like Bharat Forge Sona BLW , and Motherson Sumi A possible turnaround in the entry level demand for bikes driven by the rural market after a lacklustre trend in the recent quarters, new product launches and the vehicle scrappage policy hold the key for a demand uptick in the near term, according to YES Securities. It expects gross margins to be under marginal pressure due to a possible material inflation, cushioned partially by favourable product mix in the first half of FY26. In addition, the income tax relief is anticipated to boost demand, especially for price-sensitive fundamentals showing signs of fatigue, analysts advise caution in near term. Stocks with strong domestic demand drivers, rural exposure, and EV-related product lines may hold up better, but margin pressures and global uncertainties could limit further upside. According to MOFSL, the recent stock market rally has led to the normalisation of valuation multiples which had fallen in the recent past. 'The earnings outlook for the sector appears benign, given the modest volume growth outlook and expectations of rising input cost pressure,' the brokerage stated in the report, highlighting that it prefers Endurance Technologies and Happy Forgings among auto ancillaries stocks.


Economic Times
an hour ago
- Economic Times
Sebi issues new ESG debt framework to regulate social, sustainability, and linked bonds
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel To encourage responsible finance and curb "purpose-washing," capital markets regulator Sebi has released a detailed framework for issuing and listing ESG (Environment, Social and Governance) debt securities, excluding green new norms, which came into effect on June 5, aim to enhance transparency, credibility, and accountability in the ESG debt to Sebi, ESG debt securities will now include three major categories apart from green bonds — social bonds, sustainability bonds , and sustainability-linked bonds . These instruments must follow recognized global standards such as the ICMA Principles, Climate Bonds Standard, ASEAN Standards, or any methodology notified by Indian financial bonds are meant to raise money for projects with a direct social impact, such as affordable housing, clean water, education, or food security. Sustainability bonds combine both environmental and social objectives, while sustainability-linked bonds are performance-based instruments, where the financial terms are tied to the issuer's achievement of pre-set sustainability of such bonds will need to make detailed disclosures before and after the issue. They must outline the specific projects they intend to fund, explain how they will track fund usage, and appoint independent third-party reviewers to verify claims. Post-listing, companies must share impact reports, usage of proceeds, and KPIs in their annual reports. This is aimed at curbing the misuse of ESG labels — known as 'purpose-washing' — where companies falsely claim to be funding ESG has also made it clear that companies listed on SME platforms and looking to issue ESG debt will need to follow bi-annual disclosure norms, as specified in the circular's annexures. The regulator has empowered ESG rating agencies and certified reviewers to ensure proper assessments of bond impact and target if any ESG funds are found misused or the projects do not align with their stated purpose, companies may be forced to redeem the securities regulatory push comes at a time when ESG investing is gaining traction in India. By aligning local frameworks with international norms, Sebi aims to build investor confidence and deepen India's ESG debt market responsibly.


Time of India
an hour ago
- Time of India
Sebi issues new ESG debt framework to regulate social, sustainability, and linked bonds
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel To encourage responsible finance and curb "purpose-washing," capital markets regulator Sebi has released a detailed framework for issuing and listing ESG (Environment, Social and Governance) debt securities, excluding green new norms, which came into effect on June 5, aim to enhance transparency, credibility, and accountability in the ESG debt to Sebi, ESG debt securities will now include three major categories apart from green bonds — social bonds, sustainability bonds , and sustainability-linked bonds . These instruments must follow recognized global standards such as the ICMA Principles, Climate Bonds Standard, ASEAN Standards, or any methodology notified by Indian financial bonds are meant to raise money for projects with a direct social impact, such as affordable housing, clean water, education, or food security. Sustainability bonds combine both environmental and social objectives, while sustainability-linked bonds are performance-based instruments, where the financial terms are tied to the issuer's achievement of pre-set sustainability of such bonds will need to make detailed disclosures before and after the issue. They must outline the specific projects they intend to fund, explain how they will track fund usage, and appoint independent third-party reviewers to verify claims. Post-listing, companies must share impact reports, usage of proceeds, and KPIs in their annual reports. This is aimed at curbing the misuse of ESG labels — known as 'purpose-washing' — where companies falsely claim to be funding ESG has also made it clear that companies listed on SME platforms and looking to issue ESG debt will need to follow bi-annual disclosure norms, as specified in the circular's annexures. The regulator has empowered ESG rating agencies and certified reviewers to ensure proper assessments of bond impact and target if any ESG funds are found misused or the projects do not align with their stated purpose, companies may be forced to redeem the securities regulatory push comes at a time when ESG investing is gaining traction in India. By aligning local frameworks with international norms, Sebi aims to build investor confidence and deepen India's ESG debt market responsibly.