Indian Auto Ancillary Stocks Are Ready to Grab Investors’ Eyeballs!

The auto ancillary market in India pertains to the sector involved in producing automobile components, parts, and accessories. It plays a vital role in bolstering the expansion of the country’s automotive industry. Auto ancillary companies are responsible for providing a diverse range of products, including engine parts, electrical components, braking systems, suspension elements, and more, to automobile manufacturers.

Auto ancillary companies play a significant role in India’s economy, contributing around 2.3% to the country’s GDP. The growth of this sector is primarily promoted by strategic partnerships and a focus on research and development. According to the Automotive Component Manufacturers Association of India (ACMA), the auto-components industry of India is expected to grow by 10-15% in FY24, which would be driven by both domestic and export market demand.

The industry is a leader in exports and provides jobs to over 3.7 crore people. Due to the high development prospects in all vehicle industry segments, the auto component sector is expected to see double-digit growth in FY24. The industry is expected to stand at USD 200 billion by FY26.

India ranks among the largest automobile markets globally, and the auto ancillary sector has experienced substantial growth over time. This growth is attributed to several factors such as the escalating vehicle production, increasing demand for customized vehicles, advancements in technology, and government initiatives aimed at promoting the automotive industry.

Out of the numerous companies listed in India’s stock exchanges under the Auto Ancillary sector, a select few stocks have exhibited exceptional absolute returns over the past three years.

 In recent years, the auto ancillary sector has witnessed a surge in growth propelled by various factors, including rising automobile demand, government efforts to encourage electric vehicles, and global supply chain disruptions that have resulted in a favourable shift in production towards India. It is important to know while considering investments in auto ancillary stocks, which is the close correlation between the performance of auto ancillary companies and the demand from both automobile manufacturers and the overall economy. The auto ancillary segment of the stock market is significantly influenced by fluctuations in demand, making it susceptible to significant swings in performance.