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Rating firm Icra has said annual revenue growth of leading auto component manufacturing companies will come down to 5-7 per cent in the next fiscal due to moderation in domestic volumes and a drop in exports. According to Icra estimates, its sample of 45 auto ancillaries, with aggregate annual revenues of Rs 2.7 lakh crore in FY23, is likely to grow by 9-11 per cent in FY24, driven by healthy domestic demand despite a high base and moderate growth in exports.

It also noted that capex towards capacity enhancements and technological development resulted in higher investment in FY24, which is likely to continue in FY25. It stated the industry is estimated to incur a capex of at least Rs 20,000-25,000 crore in FY2025, with incremental investments being towards new product additions, product development for committed platforms, and development of advanced technology.

It added the capex would also go into EV components, capacity enhancements and upcoming regulatory changes. Besides, it said factors like rising supplies to new platforms because of vendor diversification initiatives by global original equipment manufacturers (OEMs), higher value addition and aftermarket demand potential in overseas markets, with the ageing of vehicles augur well for Indian auto component suppliers.