The Indian forging industry size is roughly ~48 million tones as on FY16. The demand for forging industry is largely dependent on automotive sector which accounts for nearly 60% of total forging production and remaining comes from non-automotive sectors such as oil and gas, petrochemical, construction and mining, defense, railway and marine sector. Within the automotive sector, it is the commercial vehicles segment that is predominant mover; this is followed by the passenger car segment.

In its operational energy requirements, the forging industry uses 65% oil, 30% electricity and 5% natural gas. The industry has been benefiting from the prevailing lower oil price as oil is a major source of energy.

Source: Acuité Research; Ace Equity

Key Risks & Attributes

• Availability of inputs and complementary products
• Prices of raw material
• Capacity additions in view of incremental demand
• Demand from end-user sectors (such as automotive and infrastructure)
• Government Policy