Increased allocation to infrastructure spending in the Union Budget for next fiscal will also support demand the report said. The Union Budget proposed to increase capital expenditure spending by 33 per cent to Rs 10 lakh crore, focusing on augmenting core infrastructure assets, including roads, railways, airports and logistics.
The allocation has grown four times since 2015-16, from Rs 2.5 lakh crore to Rs 10.0 lakh crore (Budget estimate for 2023-24).
“This follows strong volume growth of 31 per cent and 27 per cent in fiscals 2022 and 2023, respectively, as demand bounced back on increased activity in the roads, mining, real estate and construction sectors, as well as focus on last-mile connectivity,” the ratings agency said.
Besides higher volume, increase of 2-5 per cent in realisations as original equipment manufacturers (OEMs) comply with BS VI-Stage II1 norms, and benefit of lower commodity prices, especially steel, will help improve operating profitability to a four-year high of 7-7.5 per cent next fiscal from an estimated 5-6 per cent this fiscal ending March 2023.
“With strong demand prospects, we expect LCV sale volumes to grow 8-10 per cent next fiscal, and cross pre-pandemic (fiscal 2019) sale volumes. MHCV sale volumes will continue to grow faster than LCVs at 13-15 per cent next fiscal, but are expected to exceed pre-pandemic sale volumes in fiscal 2025,” said Anuj Sethi, senior director, CRISIL Ratings.
For all the latest Automobile News Click Here
For the latest news and updates, follow us on Google News.
