Auto OEMs to witness pressure in Q1 FY26E amid input cost surge and operational headwinds: Report
India's auto original equipment manufacturers (OEMs) are likely to witness margin pressures in Q1FY26E, impacted by higher raw material (RM) costs and operating deleverage, according to a report by HDFC Securities.
The report added that elevated prices of key inputs, particularly steel and platinum group metals, are expected to weigh on gross margins, while lower seasonal volumes may further strain EBITDA margins.
For two-wheeler (2W) OEMs, an adverse domestic product mix, weaker export contribution, and lower electric vehicle (EV) mix have added to the challenges. The report added that minor pricing revisions are expected across two-vehicles (2W) and commercial vehicle (CV) players, triggered by the implementation of new regulations--OBD 2 norms from April 1, 2025 for 2Ws and AC cabin norms from June 8, 2025 for CVs.
The report added that auto ancillary companies are also under pressure, with subdued global demand and tariff uncertainty clouding long-term planning.
Tyre makers may get some relief from lower raw material prices, while some players could benefit from a drop in aluminium costs, the report added. However, export-focused firms face risks from rising ocean freight costs and potential disruptions. Delays in the return of migrant labourers could further impact operations, the report stated.Adding to the sector's concerns is an imminent shortage of rare-earth magnets, essential for both EV and ICE vehicle components. With most global processing concentrated in China due to its radioactive and high-cost nature, alternatives like domestic production or sourcing from Japan remain long-term prospects. In the near term, importing fully assembled components from China may be the only viable solution, though this would raise costs, reduce localisation, and potentially affect PLI eligibility, as per the report.
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Time of India
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- Time of India
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Time of India
4 hours ago
- Time of India
PLI scheme: Electronics, pharma receive 70% of total disbursements for FY25
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The electronics and pharma industry were the biggest beneficiary of the government's PLI scheme for the previous financial year FY25 cornering around 70% of the of the total fiscal incentive disbursements, according to government data quoted in a PTI scheme, which was introduced in 2021, initially for 14 industries, has been a success in boosting India's manufacturing of a total of Rs 10,114 crore disbursed by the government for the year 2024-25, the two sectors -- electronics and pharma -- got Rs 5,732 crore and Rs 2,328 crore respectively. In 2023-24, the disbursals stood at Rs 9,721 crore, according to the to the success of the PLI scheme in boosting electronics manufacturing , the sector is now included in top 3 product categories that are exported figures highlight the country's growing strength in these segments amid efforts to boost manufacturing and value-added country's electronic goods shipment saw the highest export growth rate at 32.46 per cent, jumping from USD 29.12 billion in 2023-24 to USD 38.58 billion in the last fiscal year. It was USD 23.6 billion in 2022-23 and USD 15.7 billion in this, computer hardware and peripherals, which form 3.8 per cent of the sector, saw 101 per cent growth, doubling from USD 0.7 billion to USD 1.4 billion in main destinations for electronic goods were the UAE, the US, the Netherlands, the UK, and to the data, Indian drugs and pharmaceuticals are reaching over 200 countries now. These exports increased by about 10 per cent to USD 30.5 billion in 2024-25.(With inputs from PTI)
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Business Standard
4 hours ago
- Business Standard
Electronics, pharma sectors corner 70% of PLI disbursements in FY25
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