Indian Aviation: Flying High and creating new opportunities for high-end manufacturing!!

Industrial Update – Newsletter – June 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

Indian Aviation: Flying High and creating new opportunities for high-end manufacturing!!
In 2024, India emerged as the 3^rd largest aviation market after the US and China. India’s domestic airline capacity touched 15.6 Mn in 2024, up from just 8 Mn in 2014. Overall, the market in India has grown by ~7% over the past decade, emerging as the fastest growing aviation market globally. Factors driving this growth:

•Strong Macros: Rising per-capita incomes combined with a growing preference for tourism, both domestic and international, has seen air passengers reach 150Mn+ in 2024 from ~60Mn in 2014.

•UDAN Scheme: Initiated to improve regional air connectivity and make air travel affordable to the masses, it has helped double the no of operational airports to 157 in 2024 from 74 in 2014. This has added nearly ~560 additional flight routes across the country.

The confidence in the Indian market is backed by air-craft orders, with 530 aircraft ordered by Indigo, 470 by the Air India group and 150 by Akasa Air in just 2023-24. Overall, the carriers have an order-book of ~1700 planes.

This growth is creating opportunities in aerospace manufacturing:

•Aircraft Assembly: With the volume of orders, both Boeing and Airbus are expected to set-up final assembly lines for civilian planes in India, with Airbus already in JV with Tata to assemble helicopters here

•Maintenance, Repair & Overhaul (MRO): Currently, 80-90% of India’s MRO needs are met overseas. With growth, favourable govt policies & a large qualified engineering talent pool, India is set to emerge as a hub for MRO services. The Indian MRO industry size is expected to quadruple to $4 Bn by 2031. Boeing, Airbus, Safran, GE Aviation etc. have all announced MRO.

Both these factors are benefitting key sectors like precision machining, electronics, avionics, composites & others.

Key Players

Some recent transactions

Jun’24	Ethereal Machines	The CNC machined component manufacturer raised ~₹ 108 Cr. in a fundraise led by Peak XV ventures
Jun’24	Indigrid Technologies	The EV Battery pack assembler raised ~₹42 Cr. in a fundraise led by Cactus Ventures
Jun’24	Penna Cements	Ambuja Cements acquired 100% of the construction material manufacturer for ~₹ 10,422 Cr.
Jun’24	Syscomp India	Kirloskar Pneumatics acquired a 54% stake  in the manufacturer of process chillers systems
Jun’24	Zepto	The hyperlocal delivery platform raised ~₹ 5,558 Cr. in their series F round led by Avenit Capital
Jun’24	Matter Motors	The EV 2Ws manufacturer raised ~₹ 82 Cr. in a fundraise led by  Helena Special Investments Fund

Recent News

• European Central Bank (ECB) cut interest rates for the first time in 5 years reducing main interest rates from 4% to 3.75%; US Fed left benchmark rates on hold and so did RBI during June review
• The Korean Auto giant, Hyundai, has filed its DRHP and is set to go public in India’s largest IPO with an issue size of ~ ₹ 25,000 Cr
• In a significant step towards privatization of the space industry, Spacetech startup Pixxel has inked a deal with the Ministry of Defence (MoD) to manufacture miniaturized satellites for the Indian Air Force
• India’s manufacturing PMI grew to 58.5 in June from 57.5 in the previous month; a PMI value above 50 indicates growth
• Homegrown EV 2Ws manufacturer, Ather Energy, plans to invest ~ ₹ 2,000 Cr. to establish an EV manufacturing plant in Maharashtra; the company currently owns and operates 2 facilities in Tamil Nadu

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