Automotive components manufacturers in India is set to register 10-12 % growth in revenue during the financial year 2023-24, said Crisil Ratings recently. It attributed the growth to continued domestic growth — buoyed by robust demand from automobile manufacturers and aftersales demand from services. “This is despite exports continuing to remain sluggish,” Crisil Ratings said.
Further, the rating agency noted moderation in prices of key raw materials will support their operating margin to reach the pre-pandemic levels of 12.0-12.5 % against 11.9% last year.
“Improving semi-conductor availability will support supplies of passenger vehicles and premium motorcycles. Exports, the second-largest revenue contributor, will remain sluggish amid continuing headwinds in key markets in Asia, Africa, and Latin America. Lastly, revenue from the aftermarket segment, which accounts for the balance, will grow at a steady 6-8 %, supported by strong automotive sales in past fiscals,” said Anuj Sethi, Senior Director, CRISIL Ratings. Also, going ahead, component markets are expected to continue to diversify their product basket by enhancing focus on the need for the electric vehicles industry.
“With EV adoption expected to be fastest in the two- and three-wheeler segments, the auto component makers with high exposure to engine and transmission components are likely to focus on diversifying their product basket. This, along with the focus on meeting PLI (production-linked incentive) related commitments and capacity enhancements, will push up capital spending,” said Poonam Upadhyay, Director, CRISIL Ratings.
