Auto component sector growth forecast revised downwards amid Omicron wave: Icra

Despite the potential Omicron impact, the domestic aftermarket demand is expected to grow 8 to 10 per cent in FY22.Exports will also flourish for the Indian auto component sector with an estimated growth of over 20 per cent this fiscal.
By : HT Auto Desk
| Updated on: 13 Jan 2022, 03:31 PM
File photo used for representational purpose only (Bloomberg)
File photo used for representational purpose only (Bloomberg)
File photo used for representational purpose only (Bloomberg)
File photo used for representational purpose only

Rating agency Icra on Thursday informed that it has revised downwards the revenue growth forecast for the auto components industry for the current fiscal to 15-17 per cent. The agency attributed the downwards revision to the impact caused by t Omicron wave, delayed recovery in semiconductors shortage and muted two-wheelers demand.

However, it formed that despite the potential Omicron impact, the domestic aftermarket demand is expected to grow 8 to 10 per cent in FY22 while exports will also flourish for the Indian auto component sector with an estimated growth of over 20 per cent this fiscal. 

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The agency also informed that Icra expects the 15-17 per cent revenue growth in the ongoing fiscal for the Indian auto component industry to be driven by domestic OEM, replacement, export volumes and pass-through of commodity prices, Icra Assistant Vice President and Sector Head Vinutaa S said in a statement. She added that the healthy volume growth would, however, come on a low base of FY21.

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(Also read | Passenger vehicle industry growth forecast downgraded to 8-11% for FY22: ICRA)

There could be a further downward bias to Icra's estimates in case of prolonged lockdowns or significant demand slowdown because of the Omicron wave. While most domestic OEM sub-segments are expected to register healthy volume growth this fiscal, though on a low base, Icra said the pass-through of commodity prices will also inflate revenues by 4-5 per cent.

Certain segments such as two-wheelers (2W) and buses will be impacted by the Omicron wave. "We expect a delayed recovery in the 2W segment because of affordability and dampened sentiments. Also, demand for buses is expected to be impacted during the upcoming school season for the third year in a row," the rating agency said, adding supply-chain issues could prolong further as well.

In terms of export, the rating agency said the Indian auto component suppliers have reported a healthy improvement in sales volumes to Europe in year-to-date FY22 and have a strong order book for the next few months.

(with inputs from PTI)

First Published Date: 13 Jan 2022, 03:30 PM IST
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