Domestic tractors sales are expected to grow in the range of 7-9 per cent in the current fiscal, according to ratings agency Icra.
Normal monsoon however, remains critical for sustaining domestic tractor volumes during the financial year, it added.
"Even though the demand drivers continue to remain robust, ICRA expects industry growth to moderate in the current fiscal (expected growth of 7-9 per cent in the current fiscal), with the domestic volumes already touching a new peak of 7.1 lakhs in the previous fiscal," ICRA said.
However, as the profitability of OEMS in the tractor industry remains linked to industry demand, the operating margins for the various manufacturers are expected to remain at healthy levels, it added.
While the OEMs are expected to incur capital expenditure towards new product developments and upgradation of existing product portfolio to meet stringent emission norms over the medium term, the credit profile of the entities in the industry are also expected to remain strong, Icra noted.
"Over the long term, ICRA continues to maintain a long term CAGR estimate of 8-9 per cent for the industry, with the long-term industry drivers for the industry continuing to remain intact," Icra Vice President and Sector Head, Corporate Ratings, Anupama Arora said.