Auto ancillary sector’s FY23 revenue expected to grow at 10-15% YoY

Domestic auto ancillary sector’s revenue is expected to grow at 10-15 per cent year-on-year (YoY) in FY23.

Accordingly, the trend is supported by moderate growth of 5-9 per cent YoY in original equipment manufacturers’ volumes and continued healthy exports.

However, the FY23 growth is lower than the estimated at 20-25 per cent YoY rise in FY22, due to rising input cost.

“Demand from the aftermarket is likely to provide a steady contribution,” said India Ratings and Research (Ind-Ra).

“In addition to the volume growth, the realisations would be aided by the full-year impact of higher selling prices, as higher raw material prices in FY22 would largely be passed on by early FY23, and a continued increase in the sales to the medium and heavy commercial vehicles segment which are of a higher value than other segments.”

Besides, the agency expects profitability margins to remain flat to increasing marginally in FY23, as better operating leverage would be offset by firm commodity prices, continued supply chain issues and increased logistics cost due to higher fuel prices.A

“The sector performance remains exposed to downside risks, including those from evolving geopolitical tensions and any subsequent Covid-19 waves.”

Nevertheless, Ind-Ra noted that Capex is expected to be higher in FY23 in lieu of the onset of capex under the auto component and advanced chemistry cell batteries production-linked incentives schemes.

“The sector’s renewed focus on investments in R&D, technological tie-ups and/or inorganic acquisitions would continue in the near-to-medium term.”

–IANS

rv/shb/

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor