Flying high: Indian MRO sector forecasted to achieve Rs 4,500 crore revenue by FY26
This along with players' improving profitability will have MRO players savouring improved credit profile over the medium term, it stated
The Indian aircraft maintenance, repair, and overhaul (MRO) industry is projected to experience a remarkable 50% growth, reaching a revenue of ₹4,500 crore in fiscal year 2026 (FY26), driven by increased demand from expanding airline fleets, according to a report by ratings agency Crisil. This growth is attributed to the rising number of aircraft operated by domestic airlines, which is expected to increase by 20-25% over the next year.
Key Factors Driving Growth
Crisil's analysis indicates that the reduction in Goods and Services Tax (GST) on aircraft components and services has positioned domestic MRO players more competitively against their international counterparts, easing working capital constraints. The MRO sector typically provides three main types of services: line checks before takeoff, airframe checks every 12-18 months, and redelivery checks at the end of lease periods.
Profitability and Debt Metrics
The anticipated increase in scale is expected to enhance profitability margins, with projections indicating that profitability could improve to around 20% by FY26. The report also notes that debt levels are likely to remain stable, which will improve debt protection metrics and strengthen credit profiles for MRO players.
Service Expansion and Market Penetration
Indian MRO operators are also expanding their service offerings, which could increase their market penetration from 14% to potentially 20% by next fiscal year. However, the report highlights that the ability to ramp up hangar capacities and develop a local ecosystem for aviation spare parts will take time.
Challenges and Opportunities
Despite these positive indicators, challenges remain. Currently, high-value maintenance checks are often contracted out to overseas providers due to capacity constraints within India. Nevertheless, the reduction in GST on components is expected to lower costs and enhance the competitiveness of Indian MROs in the region.
Conclusion
Overall, the Indian MRO industry is poised for significant growth as it adapts to increasing demand and competitive pressures. With strategic investments and operational improvements, domestic players are likely to capture a larger share of the market in the coming years.
(Except for the headline, nothing has been changed by All India News Network in the PTI copy.)
