For FY25, the growth is likely to be relatively lower to 5-7 per cent, with expected moderation in domestic volume growth and a weak outlook for exports, Icra said.
It also noted that capex towards capacity enhancements and technological development resulted in higher investment in FY24, which is likely to continue in FY25.
The industry is estimated to incur a capex of at least Rs 20,000-25,000 crore in FY2025, with incremental investments being towards new product additions, product development for committed platforms, and development of advanced technology, the rating agency stated.
The capex would also go into EV components, capacity enhancements and upcoming regulatory changes, it added.
Factors like rising supplies to new platforms because of vendor diversification initiatives by global original equipment manufacturers (OEMs), higher value addition and aftermarket demand potential in overseas markets, with the ageing of vehicles augur well for Indian auto component suppliers, Icra said. Over the medium to long term, Icra expects EV opportunities, premiumisation of vehicles, focus on localisation, and changes in regulatory norms to support stable growth for auto component suppliers aided by higher content per vehicle, it added.
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