According to rating agency ICRA, operating margins are expected to improve year-on-year in FY25, driven by factors such as better operating leverage and higher value addition.
"Demand from domestic original equipment manufacturers (OEMs) constitutes more than 50 per cent of the Indian auto components industry's sales and the pace of growth in the segment is expected to moderate in fiscal 2025," said Vinutaa Sriraman, Vice President and Sector Head – Corporate Ratings. , ICRA Limited.
"Replacement demand growth is pegged at 5-7 per cent, after two-three years of healthy growth, following a relatively weak first quarter in the current fiscal," he added.
The sample for the report included 46 auto ancillaries with aggregate annual revenues of over Rs 300 billion in FY2024.
Additionally, the report projected that the industry will incur capital expenditure of Rs 20,000-25,000 crore in fiscal 2025 for capacity expansion and technology development.
Capital expenditure is expected to be around 8-10 per cent of operating income in the medium term, and the PLI scheme will also help accelerate capital expenditure towards advanced technology and electric vehicle components.
On the export front, new vehicle registrations in Europe and the United States are expected to remain subdued over the coming quarters, impacted by the weak global macroeconomic environment and geopolitical tensions.
Aging of vehicles and increasing sales of used vehicles in global markets are also expected to help the export of components for the replacement segment in foreign markets.
The report further mentions that electric vehicles (EV) link opportunities, premiumization of vehicles, focus on localization and changes in regulatory norms to support the stable growth of auto component suppliers.
Electric vehicles will account for around 25 percent of domestic two-wheeler sales and 15 percent of passenger vehicle sales by 2030. This would translate into strong market potential for electric vehicle components by 2030. , according to the report.
"Demand from domestic original equipment manufacturers (OEMs) constitutes more than 50 per cent of the Indian auto components industry's sales and the pace of growth in the segment is expected to moderate in fiscal 2025," said Vinutaa Sriraman, Vice President and Sector Head – Corporate Ratings. , ICRA Limited.
"Replacement demand growth is pegged at 5-7 per cent, after two-three years of healthy growth, following a relatively weak first quarter in the current fiscal," he added.
The sample for the report included 46 auto ancillaries with aggregate annual revenues of over Rs 300 billion in FY2024.
Additionally, the report projected that the industry will incur capital expenditure of Rs 20,000-25,000 crore in fiscal 2025 for capacity expansion and technology development.
Capital expenditure is expected to be around 8-10 per cent of operating income in the medium term, and the PLI scheme will also help accelerate capital expenditure towards advanced technology and electric vehicle components.
On the export front, new vehicle registrations in Europe and the United States are expected to remain subdued over the coming quarters, impacted by the weak global macroeconomic environment and geopolitical tensions.
Aging of vehicles and increasing sales of used vehicles in global markets are also expected to help the export of components for the replacement segment in foreign markets.
The report further mentions that electric vehicles (EV) link opportunities, premiumization of vehicles, focus on localization and changes in regulatory norms to support the stable growth of auto component suppliers.
Electric vehicles will account for around 25 percent of domestic two-wheeler sales and 15 percent of passenger vehicle sales by 2030. This would translate into strong market potential for electric vehicle components by 2030. , according to the report.
