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Auto Component Sector Gains from GST Cut, Strong Orders & Export Demand

A Centrum report states the auto component sector is poised for growth due to a strong order pipeline and demand recovery following the recent GST rate reduction. The recovery is expected across passenger vehicles, two-wheelers, and three-wheelers, easing cost pressures and boosting consumer demand. Export momentum remains a key positive, supporting revenue growth and capacity utilisation for leading companies. Furthermore, diversification into non-auto segments like railways and wind energy is expected to improve earnings stability and reduce cyclical dependence.

Key Points: Auto Component Sector Growth Post-GST Cut: Report

  • Strong order pipeline post-GST cut
  • Demand recovery in passenger and two-wheeler segments
  • Export momentum supports revenue growth
  • Diversification into railways and wind energy
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Auto component sector to gain from strong order pipeline, demand recovery post GST cut: Report

Report highlights auto component sector recovery driven by GST cut, strong order pipeline, and robust export momentum for bearings and ancillary companies.

"We expect the bearings sector to benefit from a strong order pipeline and a demand recovery across PV, 2W and 3W segments following the GST cut - Centrum Report"

New Delhi, January 8

The auto component sector is expected to benefit from a strong order pipeline and a recovery in demand across passenger vehicles, two-wheelers and three-wheelers following the recent GST cut, highlighted a report by Centrum.

The report stated the improvement in demand across key vehicle segments is likely to support volume growth for auto original equipment manufacturers (OEMs) as well as ancillary companies.

The recovery is expected to be driven by improved vehicle sales after the GST cut, which has eased cost pressures and supported consumer demand.

It stated "We expect the bearings sector to benefit from a strong order pipeline and a demand recovery across PV, 2W and 3W segments following the GST cut".

The bearing sector which refers as the broader automotive industry segment involved in manufacturing and supplying bearings, which are critical components used across various vehicle systems. These components play an essential role in ensuring smooth functioning, efficiency and durability of automobiles.

The report further highlighted that export momentum remains a key positive for the sector. Sustained demand from overseas markets is expected to support revenue growth and capacity utilisation, even as domestic demand continues to stabilise. High export growth is seen as an important factor in strengthening the overall operating performance of leading companies in the sector.

In addition to exports, ongoing localisation efforts are expected to provide incremental volume support. The report pointed out that companies are increasingly focusing on expanding their presence in non-auto segments such as railways, process industries, wind energy and other core industrial areas.

This diversification is likely to help reduce dependence on cyclical auto demand and improve earnings stability over the medium term.

The report also stated that a healthier operating environment should support a gradual improvement in market share and export intensity for leading players in the bearing and auto component space. Better demand visibility, improving order flows and a supportive cost environment are expected to aid margins and profitability.

Overall, the report suggested that the combination of demand recovery, export strength, localisation initiatives and diversification into core industrial segments places the auto component and bearing sector on a relatively strong footing in the coming period.

- ANI

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Reader Comments

S
Sarah B
Positive report, but I hope this growth translates into better quality and safety standards for vehicles on our roads. The focus on diversification into railways and wind energy is a smart, future-proof move.
R
Rohit P
Finally some good news! The last few years were tough for the auto industry. Lower GST on components should make vehicles slightly more affordable, boosting demand. Let's see if the companies pass on the full benefit to consumers.
P
Priyanka N
The export momentum is key. We need to become a global hub for auto components, not just rely on domestic cycles. Diversification into industrial segments is the right strategy for long-term health of these companies.
M
Michael C
While the report is optimistic, I'd respectfully point out that demand recovery needs to be sustained. A single GST cut is a stimulus, not a structural solution. The sector still faces challenges from EV transition and high raw material costs.
K
Kavya N
Good for the economy! A thriving auto component sector has a huge multiplier effect. It supports MSMEs, creates skilled jobs, and strengthens manufacturing. Hope the focus on localisation continues. #MakeInIndia

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