Annual Revenue of 49 Automotive Accessories Could Increase 8-10% in FY23: Icra

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While cost pressures are expected to continue in the first half of the fiscal year, ICRA expects a 50-75 basis point year-on-year improvement in operating margins in 2022-23, with a decline commodity prices and supply chain issues

While cost pressures are expected to continue in the first half of the fiscal year, ICRA expects a 50-75 basis point year-on-year improvement in operating margins in 2022-23, with a decline commodity prices and supply chain issues

The annual revenue of about 49 auto accessories is expected to rise 8-10% in the current financial year from ₹3 lakh crore, ratings agency Icra said on Thursday.

The increase in revenue is expected thanks to stable demand and a gradual easing of supply chain issues in 2022-23, he added.

Stable demand from the OEM segment coupled with continued upscaling of vehicles, focus on localization, improved export potential and opportunities for electric vehicles (resulting in higher content per vehicle) would translate into healthy growth prospects for automotive component suppliers, Icra said in a statement.

While cost pressures are expected to continue in the first half of the fiscal year, Icra expects a 50-75 basis point year-on-year improvement in operating margins in 2022-23, with an easing commodity prices and supply chain issues, he added. .

“While the sharp depreciation of the rupiah against the dollar could impact the cost structure of highly import-dependent automotive accessories, the impact on margins will be determined by the ability to pass through the same,” said said Icra.

Additionally, Icra noted that it expects automotive component suppliers to gradually increase capital expenditure in 2022-23 to 6-6.5% of operating profit, translating to 16,000 to ₹18,000 crore.

The additional investments will be mainly for capacity expansion, adding new products and developing technological components and advanced electric vehicles, unlike investments in capacity expansion seen in the past, he added. .

“Capital expenditure is expected to hover around 7-8% of operating profit in fiscal years 2024 and 2025, or more than ₹20,000 crore each in fiscal years 2024 and 2025,” Icra said.

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