Ratings agency Icra has lowered its sales growth estimates for the auto component industry to 15-17% for the current fiscal due to the Omicron crisis, delayed recovery from semiconductor shortage and sluggish demand for two-wheelers. However, despite Omicron, the company expects the potential impact to be 8-10% growth in domestic aftermarket demand in FY22, with exports remaining the bright spot in the Indian auto parts market. It is expected to grow by more than 20% in the fiscal year. This is expected.

"Because of the ongoing Omicron crisis, delayed semiconductor recovery, and bipolar economic downturn, 2022 The FY (revenue) growth forecast has declined by 200 a basis point compared to the previous forecast." Ikra S said in a statement:

Icra added that the Indian auto component industry is expected to achieve "robust sales growth of 15-17%" in the current fiscal, driven by domestic OEMs, substitutes, export volumes and raw material price transmission.

However, Vinutaa added that healthy sales growth will change the baseline lower in fiscal 2021, and if the Omicron wave leads to a prolonged lockout or a significant slowdown in demand, the Icra estimate could deviate downward.

Icra said it expects healthy volume growth in most of the domestic OEM segments in FY22, despite a low base in the previous fiscal. Revenues are expected to grow by 4-5% due to higher raw material price pass-through.

However, two-wheelers (2W) Some sectors such as buses are expected to be impacted by the Omicron wave. Further, 2W The recovery of the sector is expected to be delayed due to poor economic performance and sluggish demand for buses. This will be impacted for the third consecutive year in the upcoming academic quarter, the ratings agency said, adding that supply chain issues could become more persistent.

Last year COVID-19-19 2022, easing of embargo restrictions, improved personal mobility, good freight shipments and delayed purchases were supported by pent-up demand Sales of replacement auto parts in the second and third quarters of the fiscal year.

The agency said, "While the COVID sustained-19 wave may have some impact on mobility, delays in freight and new vehicle purchases in 2022 will delay the generation of healthy replacement demand in the fourth quarter of the fiscal year."

On the export front, the ratings agency said Indian auto component suppliers reported healthy growth in European sales through FY2022, with strong orders in the coming months, partly due to the "China " 1" strategy.

The company said the third quarter was relatively weak due to supply chain issues. If there is no shortage of chips, Indian auto parts suppliers will see better export orders.

The report pointed out that the infection rate in India's main export markets such as Europe and the United States is relatively high, and the long-term blockade remains a downside risk.

However, Venuta said that in the long run, the premiumization and localization of automobiles will contribute to the relative growth of auto component suppliers.

"We expect that the industry's five-year CAGR may be impacted due to cost pressures, but margins in fiscal 2023 will benefit from supply chain improvements." As pressures normalize, high-end vehicles are increasing," she said.