Auto parts sector likely to grow 20-23%: ICRA

The Indian auto components industry is expected to witness a 20-23% growth in revenues in the current financial year on the back of strong demand in domestic as well as global markets, aided by the low base, ratings agency ICRA said on Monday.

The agency noted that the industry bounced back ‘handsomely’ during the second half of last fiscal (FY21), with many auto components suppliers registering record revenue and profits during the fourth quarter. Exports, which account for 29% of the industry’s turnover, also witnessed healthy recovery, supported by strong traction in the key markets of the U.S. and Europe, it said.

“‘COVID 2.0’ applied a temporary brake on the auto component industry’s recovery prospects in Q1 FY22,” said Ashish Modani, V-P and sector head, ICRA.

“The aftermarket sales were also impacted for close to 4-6 weeks, because of the curfews/lockdowns and closure of workshops,” he added.

“The industry’s revenues declined by 30-40% on q-o-q basis, despite support from exports. While the q-o-q decline was relatively sharp, revenues were more than double of Q1 FY21 levels. For the full year FY22, we expect a revenue growth of 20-23% aided by growth across segments and commodity pass-through, albeit on a low base,” he said.

Mr. Modani, however, added that headwinds such as sharp increase in commodity prices, supply chain disruptions partly arising from semi-conductor shortage and premium freight expenses are expected to weigh in industry margins in FY22, partially offsetting benefits arising from improved operating leverage.

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Printable version | Sep 29, 2021 1:34:36 AM |

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