7/14/22, 11:51 AM Auto Ancillaries revenue: 'Auto ancillaries' revenue may grow 8-10% in FY23 on stable demand, easing

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Business News › Industry › Auto › Auto Components › 'Auto ancillaries' revenue may grow 8-10% in FY23 on stable demand, easing supply-chain woes'

'Auto ancillaries' revenue may grow 8-10% in FY23

on stable demand, easing supply-chain woes'
PTI Last Updated: Jun 20, 2022, 02:21 PM IST
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Synopsis
In last fiscal year, 31 auto component companies with cumulative revenues of over Rs
1,75,000 crore had registered a 23 per cent year-on-year growth in revenues, driven by
domestic original equipment manufacturers (OEMs), replacement, export volumes and
pass-through of commodity prices.

Auto ancillaries' revenues are expected

to grow 8-10 per cent in 2022-23 on the
back of a stable demand and likely
easing of supply-chain concerns in the
second half of the year, Icra
NSE -0.18 % said on Monday. At the
same time, the sector's coverage
metrics is also likely to remain
comfortable in 2022-23, benefitting
from healthy accruals and relatively low incremental debt funding
requirements, the rating agency said in a release.

In last fiscal year, 31 auto component companies with cumulative revenues of

over Rs 1,75,000 crore had registered a 23 per cent year-on-year growth in
revenues, driven by domestic original equipment manufacturers (OEMs),
replacement, export volumes and pass-through of commodity prices.

Though the growth came on a relatively low base of FY21, the actual revenue
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expansion was better than Icra's estimates, partly on account of better-than-
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https://economictimes.indiatimes.com/industry/auto/auto-components/auto-ancillaries-revenue-may-grow-8-10-in-fy23-on-stable-demand-easing-… 1/5
7/14/22, 11:51 AM Auto Ancillaries revenue: 'Auto ancillaries' revenue may grow 8-10% in FY23 on stable demand, easing supply-chain woes' …

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Icra's estimation of operating margins for FY2022 had factored in operating

leverage benefits.

However, the unprecedented inflation in raw material costs and freight costs
in H2 FY2022 (October-March )and inability to pass on the same completely
and in a timely manner impacted the profit margins in previous fiscal year,
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Operating margins for the sample 31 auto component companies in FY2022

were the lowest in last five years, it added. TOP TRENDING INDUSTRY TERMS

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"Icra expects auto ancillaries' revenues to grow by 8-10 per cent in FY2023,
Ranveer Singh Quadruplex Isha Ambani
supported by stable demand as well as the expected easing of supply-chain
related issues in H2 FY2023.

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"Over the long-term, premiumisation of vehicles, focus on localisation,
1. Front-running scandal rocks
a $31 billion Indian investing
improved exports potential and EV opportunities, resulting in higher content
giant
per vehicle, would translate to healthy growth for auto component suppliers,
in our view," said Vinutaa S, Vice President and sector head at Icra.

2. Rupee settlement may bring
annual savings of $36 billion
According to her, auto ancillaries have displayed adequate liquidity position, in hard currency

especially across tier-I and tier-II players.

3. Apple to unveil iPhone 14
series on this date. New leaks
Icra expects the coverage metrics for this sector to remain comfortable going hint at tech giant’s major
forward as well, aided by healthy accruals and relatively low incremental debt plans

funding, she stated.

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The estimated revenue growth for the sample in FY2022 was constrained by
factors like semiconductor shortage issues, muted two-wheeler and tractor
demand, and the impact of geopolitical developments on international 5. Will ITR filing deadline for
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business, she said. Here's what tax experts have
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"However, the industry's actual revenues were supported by healthy exports

and better realisations. Icra's sample of 30 companies (excluding a large auto
component supplier) reported operating margins of 10.6 per cent for FY2022,
10 basis points lower on a Y-o-Y basis, and 40 basis points lower than
projections," she added.

https://economictimes.indiatimes.com/industry/auto/auto-components/auto-ancillaries-revenue-may-grow-8-10-in-fy23-on-stable-demand-easing-… 2/5