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Auto component suppliers likely to log 8-10% growth in revenue in FY23: ICRA

15 Nov 2022 Evaluate

Credit ratings agency ICRA in its latest report has said that auto component suppliers are expected to log an 8-10 per cent growth in revenue this fiscal (FY23) driven by healthy domestic original equipment manufacturers (OEMs) and pent-up demand from the aftermarket even as headwinds persist on the exports front. It said the export orders have slowed down in the last few months, impacted by inflationary pressures, geopolitical tensions, and supply-chain issues.

According to the report, domestic original equipment manufacturer demand constitutes almost 50 per cent of sales for the Indian auto component industry. This is likely to remain healthy in FY2023, with double-digit growth expected in both passenger vehicle and commercial vehicle segments. Further, it said demand for public and private transport is expected to remain healthy with an increase in mobility, supported partly by the reopening of schools and offices. This, along with steady freight movement, is likely to aid replacement volumes in the near-term, among other factors.

Furthermore, the report stated that select companies have also started witnessing a healthy ramp-up in revenues with a steadily rising share of EVs where content per vehicle is expected to rise considerably, and added that these trends will translate into healthy growth for auto component suppliers over the medium-to-long term. However, it said certain headwinds will persist, especially for companies with a high share of imports (owing to rupee depreciation vis-a-vis USD) and elevated cost of raw materials linked to crude oil derivatives.

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