India’s Auto Sector Sees Revenue Surge Despite Rising Input Costs

Nuvama Institutional Equities forecasts a strong performance for most original equipment manufacturers, though the gains remain uneven across segments. Two-wheeler producers and select ancillary firms are positioned to lead the market, benefiting from a 30% surge in exports and favorable product mixes. Conversely, passenger vehicle makers and tire manufacturers face a more difficult landscape as they grapple with the dual burden of escalating raw material costs and diminishing scale efficiency.

Beyond passenger cars, the tractor segment has emerged as a significant contributor to top-line growth, recording a 20% increase in volume that bolstered overall revenue through improved realizations. While the industry maintains high momentum, the pressure on margins underscores the vulnerability of the supply chain to geopolitical instability in West Asia, which currently threatens to temper the financial windfall expected from robust domestic and international demand.