The domestic rating agency firm ICRA is expected to increase the revenue growth of the Indian auto component industry (represents by a sample of 46 auto assistants with annual revenue of the over FY2024 reduced 3,00,000 crores, 7-9% in FY2025 and 8–10% in FY2026, 7-9% in FY2024 to 7-9%.
It hopes that the range-bound at 11-12% in FY2025 and FY2026 is supported by operating margin, operating leverage, high content, and price joints, while commodity prices and foreign currency In any significant adverse movements in it remains weak. Rate.
The disintegration along the Red Sea route resulted in an increase in the rate of 2-3 times ocean goods in Cy2024 compared to Cy2023. Sea freight rates may affect the export/importing margins signal/imported for auto component suppliers in any and rapid and continuous growth. ICra estimates FY2026 between 25,000–30,000 crore capacity extension, localization/capacity development, and technical advancement (including EVS), among others.
Ahead opportunities
The agency said that currently only 30–40% of the EV supply chain is localized. The agency highlighted that the traction motors, control units and battery management systems have achieved significant localization in the last few years, battery cell-which is 35-40% of vehicle costs-imported in a form. Limited localization in this segment offers sufficient opportunities for domestic auto constituent manufacturers to expand their production capabilities.
ICRA Limited, Vice President of Corporate Rating and head of Sector Vinuta said, “ICRA’s conversation with large auto components indicates that industry is expected to spend the industry. 15,000-20,000 crore in FY2025 and another 25,000-30,000 crore in FY2026. Older investment will be made in addition to capacity growth and upcoming regulatory changes, in addition to new products, product development for committed platforms, and advanced technology and EV components. The R&D, however, is still at 1–3% of the operational income, much lower than the global counterparts. ICRA expects Auto ancellies’ capex To hover about 7-8% of operating income in the moderate period, also contributed to advanced technology and EV components with PLI scheme to increase in incremental capes. ,
In addition, ICRA said that due to the issues of viability, there will be opportunities for Indian players in metal casting and forging due to closing of plants in the European Union (EU). The aging of vehicles and the sale of more used vehicles in global markets will help export to the replacement segment. The impact of any import tariff on Indian auto component exports is supervised. The agency said the electric vehicle (EV) -Links would support opportunities, premiums of vehicles, focus on localization, and change in regulatory criteria, medium to prolonged auto components for auto components suppliers.
“Exports, which are close to 30% of industry revenue, are expected to be affected by vehicle registration hike in targeted markets. However, in addition to global OEM/Tier-IS and high value, growing supply on new platforms due to seller diversification initiative, such as factors, partially stems outsourcing outsourcing, well-well for Indian auto component suppliers, ” Said.
Most of the auto assistant players rated by ICRA are in investment grade, and the rating upgrade is significantly higher than the downgrade in the last 2-3 years, indicating improvement in credit profiles. ICRA hopes that coverage for the sector to be comfortable to stay comfortable for metrics and liquidity, healthy and relatively low incremental debt funding will be assisted.
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