New Delhi: India’s auto and auto ancillaries sector is expected to see operating revenue to grow by around 8 per cent in FY27, a report said on Wednesday.
The report from Brickwork Ratings said the sector is entering a new investment cycle with Rs 703 billion of projects scheduled for commissioning between FY27 and FY29.
The investments are supported by a pipeline of 184 projects worth Rs 4.76 trillion and 70 projects already under implementation.
The investment momentum is backed by Production Linked Incentive schemes, FAME III incentives and sustained capacity expansion by original equipment manufacturers and Tier I suppliers.
The ratings agency expects the sector to maintain a stable credit outlook through FY27. Strong domestic demand, rising exports and prudent balance-sheet management continue to underpin the industry’s resilience, the report said.
It forecasted EBITDA margins to improve slightly to about 14 per cent in FY27 from roughly 13 per cent in FY26.
“The sector’s leverage profile is expected to improve further, supported by internal accrual-led funding. Debt servicing is also expected to remain strong, reinforcing the sector’s stable credit outlook despite ongoing investments in capacity expansion and electrification,” it said.
“India’s auto and auto ancillaries industry is transitioning from a volume-driven market to a technology-led manufacturing ecosystem. Policy incentives, localisation initiatives and expanding export opportunities are encouraging long-term investments despite elevated capex requirements for electrification,” said Niraj Rathi, Senior Director – Ratings, Brickwork Ratings.
Healthy balance sheets and strong internal accruals should enable most organised players to navigate this transition while maintaining stable credit profiles, Rathi added.
India is estimated to have recorded 30.2 million domestic vehicle sales and 7.1 million vehicle exports in FY26, while EV penetration is estimated to have reached 8.6 per cent in FY26, up sharply from 0.8 per cent in FY20.
The country’s expanding supplier ecosystem, comprising over 40,000 component manufacturers, continues to benefit from strong SUV demand, accelerating EV adoption and improving export competitiveness across passenger vehicles and two-wheelers.
(IANS)
