India Ratings maintains stable outlook for auto sector in 2019-20

Ratings agency India Ratings and Research (Ind-Ra) has maintained a stable outlook on the auto sector, anticipating improving sales in the sector during the next fiscal over expectations of better liquidity in non-bank financial companies.

The 'stable' outlook comes despite subdued sales numbers in the last couple of months.

Society of Indian Automobile Manufacturers (SIAM) data suggested a slowdown in the sales of passenger vehicles in the domestic market which declined by 1.87 per cent on a year-on-year basis in January. The comparable figure for December stood at 0.43 per cent.

India Ratings has maintained a stable outlook on the auto sector for the upcoming fiscal "on the expectation of moderate sales volume growth in the passenger vehicle (PV) segment, high single-to-low double-digit growth in the commercial vehicle (CV) segment and steady growth in the two-wheeler (2W) segment on a year-on-year basis".

The rating firm sees an improvement in the liquidity situation of non-bank financial companies, thus it is likely to reflect in the funding availability. However, the growth rate is likely to be moderate, it added.

Apart from improved finance availability, increased construction activities and industrial activities will continue to favour CV demand.

The agency further said that credit ratings of most of the large players in its sample are set to be unaffected in 2019-20 despite capital expenditure plans in view of the ongoing regulatory changes, development of an electric vehicle platform and continued new product launches.

--IANS

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