Auto parts manufacturers’ revenue to grow 8-9% in this fiscal: ICRA

Auto parts manufacturers’ revenues are expected to grow by 8-­10 per cent in FY23, supported by stable demand in the vehicle sector and likely easing of supply chain ­related limitations in the second half of the fiscal, according to a report by rating agency ICRA.

In the last fiscal year, 31 auto component companies with cumulative revenues of over ₹1,75,000 crore had registered a 23 per cent year-on-year growth in revenues, driven by domestic original equipment manufacturers (OEMs), replacement, export volumes and pass through of commodity prices.

“The estimated revenue growth for the sample in FY22 was controlled by factors like semiconductor shortage issues, muted two wheeler and tractor demand, and the impact of geopolitical developments on international business. However, the industry’s actual revenues were supported by healthy exports and better realizations,” said Vinutaa S, Vice President and sector head, ICRA.

The unusual inflation in raw material costs and freight costs in H2 FY22 (October­-March) and the inability to pass on the same completely and in a timely manner impacted the profit margins in the last fiscal year. The operating margins of companies in FY22 were the lowest in the last five years. The capital expenditure spend of the auto additional  sample for FY22 as a proportion of their operating income was 5.9 per cent.

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