and Research Pvt Ltd (Ind-Ra) has maintained an improving outlook for the auto
sector for FY22. It would be due to a revival across segments in the second
half aided by recovery in consumer sentiments, increased preference for
personal mobility and macroeconomic tailwinds.
Tej Karan Singh,
Senior Analyst, Ind-Ra, has revised Ind-Ra’s auto volumes growth forecast to
12%-16% YoY from the initial forecast of 16%-20% YoY. The downward revision is
mainly because of a revision in the growth forecasts for two-wheelers (2Ws) to
10%-14% (initial estimate: 16%-20%) and passenger vehicles (PVs) to 15%-18%
(initial estimate: 18%-22%). The growth forecast for commercial vehicles (CVs)
is maintained at 20%-25% YoY.
revision in 2W volumes is due to reduced disposable income among buyers of the
entry-level segment, limited travel due to closed colleges and workspaces and
an increased cost of ownership. While the demand for PVs remains strong, growth
would be limited due to the semi-conductor shortage. CVs could record high
double-digit growth. Ind-Ra also expects exports to grow in line with or
marginally better than domestic sales growth in FY22.
maintained a stable rating outlook for industry revenues at 16%-20% YoY. It
expects EBITDA margins to decline by 30-80bp YoY due to higher commodity prices
and sourcing costs amid supply chain challenges. These would be passed to
customers by original equipment manufacturers (OEMs), with a time lag.
The rising fuel
prices, OEMs mulling for another price hike amid increasing input costs,
continued supply chain constraints, and subsequent COVID waves could be possible headwinds for
Source – India Ratings & Research Release
Source: India Ratings & Research Release