Auto-component sector to have revenue hike of 14-16%

Over the past 18 months there is a sharp increase in input prices which primarily include steel and aluminium. As a result, operating profitability has also increased.

The automotive components sector in the country will witness a revenue hike of 14-16% this financial year, which marks the second straight annual double-digit growth after the 24% mark in the last financial year, as per a report by Crisil Ratings.

Operating margins would be stable at 12-13% because of better utilisation and since companies pass on higher input costs to their customers. Improved demand outlook in various segments will drive a 30% rise in the CAPEX, which would be funded partly via debt, and the balance via higher accruals generated.

An analysis of 220 automotive component entities by Crisil Ratings, accounting for around one-third of the sector revenue of a whopping`4.2 trillion, stated the segment derives about 61% of the income from automobile original equipment manufacturers or OEMs, 18% from the aftermarket, and the rest 21% from exports.

Crisil Research director, Pushan Sharma said they expect all three segments to promote healthy revenue growth.

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