Aggressive pricing and cut-throat competition, coupled with a sluggish sales, is likely to see a disappointing earnings season for two-wheeler majors like Bajaj Auto, Hero Honda and TVS even as Maruti is expected to march on a modest trajectory in the car segment on the back of healthy sales, leading brokerages and analyst firms predicted.

Hero Honda will announce its Q2 results on Thursday. ?Competition between two-wheeler majors, Bajaj Auto and Hero Honda is intensifying. Though the companies reeled under margin pressure due to an increase in input cost, the same was not passed on to the customers. We expect the companies to continue to face pressure in the near term as well,? Angel Broking in its analysis of the sector said.

Angel forecasted a massive 21.8% drop in year-on-year net profit for Bajaj Auto during the July-September period at Rs 248.4 crore while expecting an 18.6% fall in profit of Hero Honda at Rs 175.7 crore. For TVS, a drastic fall was forecasted as its net profit is expected to be at Rs 6.7 crore, a slump of 73% with its operating margins at a poor 2.9%, Angel said.

The poor outlook was maintained by Religare as well as it expects Bajaj Auto’s net profit to fall by 10.4% at Rs 284.7 crore. On Hero Honda, it forecasted an 18.9% drop in net profit at Rs 175.2 crore while for TVS, it estimated the net profit at Rs 4.8 crore with a drop of 80.8%. ?In Q2 FY08, the environment for the two wheelers was negative. Banks had tightened the credit norms and increased the down payment requirement, which has rendered a large number of potential two wheeler buyers ineligible for obtaining loans,? Religare said, pointing out that the ?competitive intensity? in the industry had also increased.

Prabhudas Lilladher also had similar estimates for the two-wheeler majors. For Bajaj Auto, it expected an 11.9% drop in net profit at Rs Rs 291.9 crore while for Hero Honda it estimated a 10.9% decline at Rs 192.5 crore, blaming declining margins for the same.

Car companies, particularly Maruti, were, however, estimated to fare comfortably as they witnessed a growth in sales. ?Maruti has ended Q2 FY08 with a spectacular 21.3% volume growth y-o-y. With the discounts on most of its models extended during the quarter and steel prices rising, we expect margins to decline by 50 basis points to 13.9%,? Prabhudas Lilladher said. However, it added that a 24% topline growth at Rs 4,235 crore would translate into a 18.2% rise in net profit at Rs 447 crore. On Tata Motors, it forecasted a small 6.7% rise in net at Rs 471.7 crore.

Angel Broking was more bullish on Maruti as it predicted the company to see a 30.6% growth in net profit at Rs 479.9 crore even though it forecasted a mere 3.4% rise in profits of Tata Motors at Rs 451.1 crore with the company not doing so well in sales.

Religare forecasted a 23.3% rise in net profit of Maruti at Rs 453.2 crore, saying the company’s realisations were more due to higher sale of premium vehicles like ‘Swift’ and ‘SX4’.