Healthy monsoon along with prospects of higher crop production are expected to lift domestic tractor sales growth by 10-12 per cent in the current fiscal, said credit ratings agency CRISIL on Wednesday.
According to a Crisil report, higher volume and improved product mix will drive expansion in operating margin of tractor makers, thereby supporting credit profiles.
The report cited healthy monsoon and higher crop production as the key factors for higher sales volume forecast.
In the past rabi season, crop production surged a significant seven per cent on-year, the ratings agency revealed.
“This is reflected in the strong pick-up in tractor sales volume during the second quarter of this fiscal despite a sharp de-growth in the first quarter due to Covid pandemic-related containment measures,” the report said.
“In April-September 2020, industry volume was up by 12 per cent on-year.”
As per the report, tractor volumes may continue to grow for the rest of this fiscal given healthy crop prospects over the medium-term and timely government interventions.
“Good rains in June have facilitated early sowing and boosted kharif acreage. A well-distributed normal monsoon season above nine per cent means reservoir levels surging to their highest in five years,” the report added.
“That augurs well for the upcoming crop seasons,” the report said.