New Delhi [India], January 8 : The auto component sector is expected to benefit from a strong order pipeline and a recovery in demand across passenger vehicles (PV), two-wheelers (2W) and three-wheelers (3W) 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.
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