Auto Component Sector Gears Up for Revenue Surge Amid Global Challenges

The domestic automotive component sector is anticipated to achieve a 7-9% revenue growth this fiscal year, mirroring last year's trends, according to the rating agency Crisil. This growth is mainly driven by sustained demand in the two-wheelers and passenger vehicles segments, with utility vehicles dominating nearly half of the revenue.

While commercial vehicles and tractors are expected to provide further impetus, the aftermarket sector, which constitutes 15% of the revenue, is projected to grow steadily at 5-7%. Export growth, however, faces challenges due to weak demand in the US and Europe, which account for 60% of India's exports.

The automotive OEMs demand is expected to grow by 8-9%, and despite the export challenges, high-margin components and easing input costs will help stabilize operating margins at 12-12.5%. Meanwhile, a strong focus on automation and EV capabilities drives capital expenditure, with credit profiles remaining stable despite global headwinds.

(With inputs from agencies.)