Auto components industry targets higher growth in FY18: ICRA

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KOLKATA, March 3 (AGENCIES): The auto components industry is expected to register a higher growth of 13-15 percent in the current fiscal on the back of robust demand from domestic original equipment manufacturers (OEMs), rating agency Icra said.

The demand for auto components from domestic OEMs, especially high-volume two-wheeler (2W) and passenger-vehicle (PV) industry which together constitute about two third of overall ancillary industry size, has remained strong in the third quarter of the current fiscal, it said.

The rating agency said given the indicative trends, the growth momentum is expected to sustain in the fourth quarter of FY 2018 as well.

“The rating agency’s sample of 48 auto ancillaries, comprising around 26 percent of the industry’s turnover, grew 18.5 percent revenue-wise during third quarter FY2018. The same appeared stronger on a low base of last fiscal, where overall performance was impacted by demonetisation.

Overall, during nine months of FY2018, the sample space grew by 12.3 percent which was better than the earlier 9-11 percent growth estimate for FY2018. Given strong revenue growth the growth estimates have been revised upward for FY2018 to 13-15 percent,” the agency said in a statement.

“During third quarter FY2018, auto component vendors dependent on CV (commercial vehicle) and two-wheeler segment witnessed double-digit growth in volume, which along with improved realisation due to increase in commodity prices resulted in strong revenue growth,” agency’s senior group vice president (Corporate Sector ratings) Subrata Ray said.

According to him, while domestic PV (passenger vehicle) demand remained strong, muted PV exports has dragged overall PV production volume growth during the last two quarters.

“We expect PV exports related aberration to abate during coming quarters, and it will be more than offset by robust demand momentum in the domestic market, effectively supporting auto component demand,” he added.

 

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