How are the various sub-segments in Industrials performing – a year-end review!

Industrial Update – Newsletter – December 2024

IMAP’s Industrials group brings you this monthly update with a focus on latest news, transactions and interesting snippets from the Industrials domain in India

A look at some of the key segments within the ‘Industrials’ domain shows a mixed-bag. Comparing the sector TTM performance with previous year, we see that while sectors such as Electronics Manufacturing have excelled, others such as Building Materials and Automotive have under-performed. The key headwinds faced include reduced government spending (due to elections), lower urban demand and extended monsoon

Automotive & Auto Components

While the automotive industry has seen ~8% growth in volumes, the overall revenue growth was only 2% as most of the growth was seen in the 2W and EV segments. Overall sector has been constrained by reduced demand, supply chain issues and higher costs. The auto ancillary sector has seen a relatively stronger growth with ~6% revenue growth driven by higher exports.

Defence & Aerospace

GOI allocated US$ 76 billion for defence in FY24, with ~28% for capital expenditure, the highest in a decade. This along with the localization push has driven robust growth of order books. However, the extended order to revenue cycle resulted in modest revenue growth of ~5% Y-o-Y.

Heavy & Industrial Machinery

With ~5% Y-o-Y turnover growth and a ~9% profitability growth Y-o-Y, this segment showed a modest performance. The revival in the domestic capex cycle along with rising exports resulted in a robust order book growth for players providing strong business outlook.

Electronics Manufacturing

India’s electronics manufacturing sector is among the fastest-growing globally, with ~35% turnover growth and significant profitability boost. The sector has witnessed a surge in valuations, trading at median PE multiples of 70-75x. Govt. push for import substitution, robust consumer demand and growing exports have benefited the industry.

Electrical Equipment

Fuelled by urbanization, localized manufacturing, rising exports and government initiatives in electrification (RE push and T&D infrastructure expansion) and automation the segment turnover rose by ~8% with profitability growing by 10–12%; rich valuations of companies in the segment is indicative of future growth.

Building Materials

Supply chain disruptions, fluctuating raw material prices and stagnant demand have resulted in negligible turnover growth and ~5% degrowth in profitability. With expected revival of government spending (post elections) and recent stabilization of raw material prices should bode well for this sector.

Some recent transactions

Dec’24	Epack Prefab	GEF Capital invested ~₹170 Cr. in the prefabricated structure manufacturer
Dec’24	Zetwerk	The contract manufacturing unicorn raised ~₹ 765 Cr. in a fundraise led by Khosla Ventures
Dec’24	Ultraviolette Automotive	Zoho corp. and Mudhal Partners invested ~₹ 130 Cr. in the EV two-wheeler manufacturer
Dec’24	Pixxel space Technologies	The space tech startup raised ~₹ 200 Cr. in a fundraise led by M&G Catalyst & Radical Ventures
Dec’24	Rebel Foods	The QSR unicorn raised ~₹1,782 Cr. in a series-G fundraise led by Temasek & Evolvence India
Dec’24	Mindgrove Tech	The semiconductor chip designer raised ~₹ 68 Cr in a fundraise led by Rocketship VC

Recent News

• Home grown electronic consumer durable manufacturer Dixon Technologies established a JV with Vivo India for manufacturing of smartphones and electronic devices in India
• MSI, a Taiwanese laptop manufacturer commenced manufacturing operations in India at its first facility in India, located in Chennai
• India’s manufacturing PMI cooled to 54.9 (indicating growth albeit with some softness) in Dec’25 from 56 in the previous month; a PMI value above 50 indicates growth
• Amid cooling inflation, the US FED cut Interest rates by 0.25% in Dec’25 after cuts in Nov’25 and Sep’25, lowering the target interest rate range to 4.25% to 4.5%
• SpaceX, Elon Musk’s rocket company became the most valued private startup with a valuation of US$350 billion, surpassing that of Bytedance (owner of TikTok)

IMAP Industrials Index & Valuation of sub-segments

Commodity Prices Index