Toyota, Tata Motors Positioned to Benefit From Hybrid Auto Boom

(Bloomberg) -- A rapidly-growing, global market for hybrid electric vehicles should power earnings at major Asian automakers including Japan’s Toyota Motor Corp. and India’s Tata Motors Ltd. 

Toyota’s annual operating profit growth was probably the fastest since at least 2013, led by recovery in North America and Europe. Japanese carmakers saw higher North America sales, which could continue in 2024 as US consumers opt for budget-friendly options. 

With fading subsidies for EVs denting demand globally, hybrid models are proving popular. That prompted Tata to separate its luxury and electric cars business from commercial vehicles, a move viewed as unlocking shareholder value. Indian Transport Minister Nitin Gadkari also told local news agency PTI of his proposal to cut taxes on hybrid cars to boost adoption. 

Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. are due after DBS Group Holdings Ltd. Chief Executive Officer Piyush Gupta presented earnings that beat estimates and predicted another record year for Singapore’s biggest bank. 

Highlights to look out for:

Saturday: Kotak Mahindra Bank’s (KMB IN) quarterly profit, which is projected to drop 5.5%, will be overshadowed by the central bank’s ban on it adding new clients online and the resignation of a senior executive once seen as a CEO contender. Analysts at Nuvama said these changes will dent profit growth for at least the next 12-18 months.

Monday: Westpac (WBC AU) probably beat the consensus estimate for profit in its first half, helped by higher loan growth, Bloomberg Intelligence said. The return on equity may also have remained above 10%, though its margin might have slipped.  

Tuesday: Nintendo’s (7974 JP) fiscal-year profit likely returned to growth, consensus shows, supported by a weaker yen, BI said. The Japanese gaming console maker meeting 2025 profit estimates hinges on the release of the , which remains unconfirmed,BI added. 

Wednesday: Toyota Motor’s (7203 JP) operating profit probably surged 87% to a record in the fiscal year, with a sharp recovery in North America and earnings from Europe surging sixfold from a year earlier, consensus shows. Fourth-quarter profit may exceed its target despite output cuts following certification controversies at Daihatsu and Toyota Industries, BI said. It may give muted guidance for fiscal 2025 as it reexamines operations on the heels of the scandals at affiliates.

• Hero MotoCorp (HMCL IN) may post double-digit revenue growth for a second straight year, estimates show, with higher volume and average selling prices. Its Ebitda could expand on an improved product mix and stable raw material prices, analysts at Prabhudas Lilladher said.
• UOB (UOB SP) is expected to report lower revenue and profit for the first quarter, consensus shows. Weak loan growth probably held back net interest income. The integration of Citigroup’s retail business in Malaysia, Thailand, Vietnam and Indonesia will boost its deposit base, loan book and wealth business, BI said.

Thursday: Nissan (7201 JP) said last month that full-year operating profit came in 15% lower than it had forecast in February, with unit sales also missing its earlier guidance. Intensifying competition, slower-than-expected sales and cost-relief measures extended to suppliers held back its fourth-quarter earnings, BI said.

Friday: Tata Motors (TTMT IN) is expected to say quarterly net income grew by a third, consensus show. Ebitda could also improve with consistent performance and higher volumes for its Jaguar Land Rover segment, analysts said. Watch for more details on its plan to split the passenger and commercial vehicles business into two listed companies, a move aimed at unlocking the value of its electric vehicles and the JLR unit. 

• Honda’s (7267 JP) fiscal-year operating profit probably surged 69%, estimates show. That was helped by robust auto sales in the US and Japan, a better pricing and mix, easing input costs and a weak yen, said BI. It’s also spending $11 billion to improve its EV supply chain infrastructure in Canada to meet growing long-term demand in the region.
• OCBC’s (OCBC SP) first-quarter earnings might surprise on the upside, helped by lower provisions and better trading income, Maybank analyst Thilan Wickramasinghe said in a note.

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