See recovery in auto ancillaries with 21-23% YoY growth: CRISIL
CRISIL expects a rebound in the auto components sector after two tough fiscals. “Clearly, there is a demand recovery that we are talking about, almost 21-23 percent year-on-year (YoY) growth over the last fiscal and two years we have seen an erosion in revenues almost 21-22 percent cumulative,” Hetal Gandhi, Director, CRISIL Research told CNBC-TV18.
CRISIL expects a rebound in the auto components sector after two tough fiscals.
“Clearly, there is a demand recovery that we are talking about, almost 21-23 percent year-on-year (YoY) growth over the last fiscal and two years we have seen an erosion in revenues almost 21-22 percent cumulative,” Hetal Gandhi, Director, CRISIL Research told CNBC-TV18.
She further added, “Utilisation levels for companies in this sector are expected to improve substantially. In fact, if you look at the lasted space and if you look at the top 100 players in the listed space your asset turnover ratios which had gone below 1 have improved above 1 in the third quarter of FY21 and that gives us enough confidence that you will see a continued rebound for the sector over the next 12-15 months.”
On price hikes, she said, “Component players, as well as automobile manufacturers, have passed on the complete price hike that gave them some respite despite being in a downturn for two consecutive years. Operating margins, therefore, is seeing almost 100-150 basis point improvement in next fiscal.”
“On that, we are expecting margins to improve by 100-150 basis points; the improvement is clearly driven by better utilisation levels,” she said.
Gandhi said she expected electric vehicles to have a 5-6 market by FY25.
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(Edited by : Santosh Nair)
First Published: Mar 31, 2021 12:47 PM IST
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