New Delhi [India], September 16 (ANI): India's two-wheeler export growth is expected to remain strong through FY2027, supported by demand across Latin America, Africa and Asia, but momentum could moderate sharply from FY2028 as pent-up replacement demand fades and the higher base takes effect, according to a Kotak Institutional Equities report.

"We expect FY2027E export trend to remain strong, driven by multiple geographies. However, we expect FY2028E export momentum to sharply moderate as the pent-up replacement cycle fades and a higher base of FY2027E," Kotak said in its report.

Two-wheeler exports from India have recorded a strong recovery in recent years. Export revenues grew at a 9% CAGR during FY2018-27 and 18% during FY2024-27, while export volumes rose at a 21.5% CAGR over FY2024-27, the report said.

Kotak attributed the recent growth to strong demand in the Americas, particularly Colombia, Peru and Brazil, a recovery in African markets as currency availability improved, and the reopening of the Sri Lankan market along with stronger demand in Nepal. Argentina was an exception, with exports facing multiple headwinds.

The report said Latin American demand has increasingly shifted towards motorcycles as income-generating assets, with delivery, courier and motorcycle taxi activity supporting purchases. However, Kotak expects growth in the region to moderate to mid-single digits as the benefit from lower interest rates, deferred replacement demand and rapid expansion of delivery-related demand fades.

In Africa, Kotak expects two-wheeler demand to grow at a high-single-digit CAGR in the coming years. The report said growth is likely to increasingly depend on financing availability, electrification and local assembly, rather than the currency-recovery benefit that supported the recent rebound.

Asian markets such as Sri Lanka, Nepal and Bangladesh have also recovered as supply conditions improved and deferred demand returned. Kotak expects this restocking-led recovery to slow as pent-up demand is exhausted, although Bangladesh could remain relatively steadier because of low two-wheeler penetration.

Kotak expects export markets to remain an important growth driver in FY2027, with African markets becoming increasingly important to the industry's next phase. (ANI)