Top Five Auto Ancillary Stocks of 2023: An investment of Rs 10,000 in each could fetch you around Rs 1,47,000

The Auto Ancillary Industry, integral to the Indian automotive sector, provides essential support equipment for vehicle manufacturing. This includes components such as tyres, batteries, brakes, suspension, and more. These companies play a pivotal role in ensuring the smooth functioning of the automotive ecosystem, contributing to the performance, safety, and functionality of vehicles.

The provided table outlines the top 5 performers in the auto ancillary sector, illustrating the hypothetical returns from a Rs 10,000 investment made at the beginning of the year:

About the Top Companies:

1. Banco Products (India) Ltd: Manufactures engine cooling modules and systems globally. Established in 1961, it is known for quality products in both domestic and international markets.
2. JBM Auto Ltd: Engaged in manufacturing sheet metal components, tools, dies & moulds, and buses. Also provides spare parts, accessories, and maintenance contracts for buses.
3. Remsons Industries Limited: Established in 1971, manufactures auto components such as control cables, flexible shafts, gear shift systems, and parking brake mechanisms. Major exports to the UK, Europe, North America, Brazil, Mexico, and SAARC countries.
4. NDR Auto Component Ltd: Specializes in manufacturing seat frames and trims for four-wheelers and two-wheelers. Incorporated in 2019, it operates post the demerger of the automobile seating business from Sharda Motor Industries Ltd.
5. Talbros Automotive Components Ltd: With joint venture companies, offers a diverse product portfolio including gaskets, heat shields, forgings, chassis and suspension systems, anti-vibration components, and hoses. Caters to various automobile segments globally.

Auto Ancillary Sector’s Growth Landscape 

The auto ancillary market is witnessing robust demand, driven by a growing working population and an expanding middle class. The industry’s high growth prospects make it a sunrise sector in the Indian markets. Moreover, the focus on electric vehicles (EVs) is expected to propel the market to reach USD 206 billion by 2030. India’s position as a global hub for auto component sourcing, exporting over 25% of its production annually, is anticipated to grow to USD 30 billion in FY26.

Policy Support and Competitive Advantage 

The sector benefits from policies like 100% FDI and Production Linked Incentive (PLI) schemes, expected to bring a capex of Rs 74,850 crore in the next five years. The cost-effective manufacturing base in India keeps costs lower by 10-25% compared to operations in Europe and Latin America. India’s position as the second-largest steel producer globally adds to its cost advantage, making it an emerging global auto component sourcing hub.

In conclusion, the top-performing auto ancillary stocks of 2023 showcase the sector’s resilience and potential for growth. Investors looking to ride the wave of YTD returns in this industry may find these stocks promising, backed by the sector’s strategic importance in the automotive ecosystem.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.