Auto Ancillary Sector's Revenue Expected to Grow 10-15% in FY23

The revenue of the domestic auto ancillary sector is expected to grow at 10-15% year on year in the upcoming financial year. The growth is supported by the moderate growth of 5-9% year on year in original equipment manufacturers’ volume and continued healthy exports. 

Although, the growth is still lower than the estimated, which stood at a 20-25% year on year rise in the current financial year. According to a report of India Ratings and Research, the demand from the aftermath is likely to provide a steady contribution. 

The report further said, “In addition to the volume growth, the realisation would be aided by the full-year impact of higher selling prices, as higher raw material prices in FY22 would largely be passed on by early FY23, and a continued increase in the sales to the medium and heavy commercial vehicles segment which are of a higher value than other segments.”

In addition, distributors will have a flat to marginal profit margin in the next financial year, as better operational leverage is offset by strong commodity prices, ongoing supply chain problems, and rising logistics costs due to rising fuel prices are expected to remain high.

Nonetheless, Ind-Ra said capital investment in 2011 is expected to be higher than capital investment under the production-linked incentive scheme for auto parts and advanced chemical cells.