Auto Components Industry to Register 13 to 15 % Growth in FY18: ICRA

The auto components industry is expected to document a high growth of 13 to 15% in the current financial year with robust demand from domestic original equipment manufacturers (OEMs) says rating agency ICRA(Investment Information and Credit Rating Agency of India) said.

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

The growth momentum is expected to be good in the fourth quarter of FY 2018 as well based on the indicative trends.

"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% growth estimate for FY2018. Given strong revenue growth the growth estimates have been revised upward for FY2018 to 13-15 %," 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.

He said that while domestic PV (passenger vehicle) demand remained strong, PV exports have not shown any growth, thus dragging 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.

Source: IANS