Indian auto component industry to see moderate growth this fiscal: ICRA
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Credit ratings agency ICRA has said that the Red Sea crisis is likely to impact the margins of the auto component industry over the next few quarters amid higher container rates and shipping time. It projected a moderate growth for the industry this fiscal. It stated close to two-thirds of the auto component exports are made to North America and Europe, and one-third of the imports is made from these regions.
It stated the disruption along the Red Sea route has resulted in a surge in container rates by 2-3 times in YTD (year-to-date) this calendar year compared to CY2023, while shipping time has also increased by around two weeks. Further, the industry's liquidity position, according to ICRA, remains comfortable, especially across tier-I players supported by stable cash flows and earnings. ICRA said it expects the growth in revenues of the Indian auto component industry to ease to 5-7 per cent this fiscal, from the highs of around 14 per cent in FY 2023-24.
Details, Vinutaa S, Vice President and Sector Head for corporate ratings at ICRA, said demand from domestic original equipment manufacturers (OEM) constitutes over 50 per cent of sales for the Indian auto component industry and the pace of growth in the segment is expected to moderate in FY2025.
