In the backdrop of semiconductor shortages, ICRA has recently revised FY2022 domestic volume growth estimate to 14-17%, as compared to 17-20% earlier. Dealership inventory remains extremely low at present; hence, inventory restocking at dealerships will also drive wholesale despatches in coming quarters, in case supply situation eases considerably. Sustained delays in semiconductor supplies or a high inflationary environment poses downside risks to our estimates. While sharp increase in commodity prices and supply issues drags operating margin, overall credit profile of industry participants is likely to remain stable. Delinquencies have increased during Q1 FY2022; however, ICRA expects moderation in the coming quarters with collection momentum improving
Growth of affordable housing finance companies (AHFCs) moderated in FY2021 and Q1 FY2022 due to Covid-19 induced challenges compared with significantly higher growth rates in the past. The long-term outlook for AHFCs though remains favourable supported by the largely underpenetrated market, demographic profile, government trust on housing and a conducive regulatory/tax regime. The growth in the portfolio is expected to pick-up in coming quarters, upon improvement of operating environment. Covid 2.0 impacted collection efficiencies for AHFCs given the strict lockdown across various states in Q1 FY2022. Hence delinquencies, especially, in the softer buckets increased though headline asset quality indicators remained under control. The liquidity profile of entities remains comfortable and RoA is likely to remain rangebound at 2.2-2.4% in FY2022.
The auto PLI scheme will increase localization, accelerate investments towards a local EV ecosystem and has the potential to make India an export hub in the global auto supply chain. As tier-Is scale up, the tier-IIs will also benefit, resulting in multiplier effect and cost competitiveness. The production and export of advanced automotive components will also help compensate potential loss of revenues from traditional components to an extent as overseas markets move into EVs in the future.
The Specialty Chemicals industry is expected to double by 2025, supported by both domestic and export markets. The drivers for the growth are rising disposable incomes, China Plus One strategy of global companies and ‘Aatma Nirbhar Bharat’ policy of GoI. The rise in disposable incomes is leading to a shift in consumer preferences towards more premium products. Accordingly, a key differentiator in the industry is the ability to move to more value-added products through R&D and process expertise.
One of the key impediments in the growth of the sector remains the dependence on imports for raw materials for several sub-segments. Keeping in mind the vast growth potential of the sector, some of the steps by GOI including - rationalisation of duty structure, trade protection measures for several petrochemicals, rules to avoid misuse of FTAs and revamping the plans for cluster based development of petrochemical units, should help in increasing domestic feedstock capacity in the medium term.
The investment prospects in the renewable energy sector are expected to remain strong, given the policy impetus with a target to reach 450 GW by FY2030 and competitive tariffs, as also reflected from the strong project pipeline of 40 GW providing visibility on capacity addition over the medium term. The key challenges constraining the growth remain on execution front, mainly associated with land and transmission infrastructure as well as the slow but improving progress in signing of PPAs/PSAs by intermediate procurers with state distribution utilities.
Trends & Business Outlook: Indian Road Logistics Industry
--By Mr. Shamsher Dewan,Mr. Suprio Banerjee,Mr. K. Srikumar
Trends & Business Outlook: Indian Fertiliser Industry
--By Mr. Ravish Mehta,Mr. Varun Gogia,Mr. Ankit Jain,Mr. Prashant Vasisht,Mr. Sabyasachi Majumdar
State governments' fiscal deficit and leverage in FY2022 to remain hig...
--By Ms. Neetika Shridhar,Ms. Aditi Nayar
Indian Passenger Vehicle Industry - Trends & Outlook
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Episode 3 Invite- "India Credit Outlook 2021"
Episode 2 Invite- "India Credit Outlook 2021"
Moody's- ICRA Joint India Credit Conclave, Feb 16th to 18th, 2021
Episode 1 Invite- "India Credit Outlook 2021"
ICRA Conference on Indian Corporate Sector
ICRA Conference on Indian Auto Component Industry (Chennai), 14 February 2019
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