Summary
The automotive components industry has seen a notable expansion in recent times, primarily due to the rising automotive demand, government efforts to encourage electric vehicles, and global supply chain interruptions that have prompted a favourable shift in manufacturing towards India. This article focuses on the best auto ancillary stocks in India to invest in 2023.
What are auto ancillary stocks?
Auto ancillary stocks represent shares of companies providing automotive components like engine parts, transmissions, brakes, tyres, and more. In fact, the auto ancillary sector holds greater growth potential than the automobile sector.
The automotive components industry of India is a prime foreign exchange contributor to the Indian economy. It is estimated that the organised sector has around 400 plus big and medium size players and around 5000 players in the unorganised sector, operating as Small Scale Industries (SSIs). The Indian automotive component industry accounts for approximately 2.3% of India’s GDP and recorded a 33% growth in FY 2022-23. Moreover, forecast indicates that Indian automotive components exports to grow five times over the next decade. These factors have boosted the value of auto ancillary stocks in India.
Now that we’ve got you all excited with these numbers, let’s look at the best auto ancillary stocks in India.
Top auto ancillary companies in India
To help you choose the best auto ancillary stocks in India, let us explore some of the highly rated companies operating in the auto ancillary space and their performance, like -
Bosch Limited
With a turnover of INR 14,929 crore, Bosch Limited is one of the best options among auto ancillary stocks in the market. It is India’s leading technology supplier and deals with electrical systems, multimedia players and other accessories used in automobiles.
Market cap: INR 57,946.01crore
Net profit: 9.54%.
- Samvardhana Motherson International Limited
Samvardhan Motherson International Limited is one of the top OEM manufacturing companies and provides full system solutions to its customers. This includes bumpers, wiring, a fully assembled vehicle interior and exterior module, electrical distribution systems, lighting systems, the latest technologies such as telematics and others.
Market cap: INR 62,919.08 crore
Net profit: 10.52%.
- UNO Minda
Also known as Minda Industries, UNO Minda Ltd. is one of the top suppliers of auto components and services of OEMs to automobile manufacturing companies in India. The company specialises in lighting systems, alloy wheels, batteries, switching systems and other such products.
Market cap: INR 34,505.69 crore
Net profit: 6.39%.
- Sona BLW Precisions Forgings Limited
Sona BLW Precisions Forgings is one of India’s leading automotive technology companies that focuses on research and development. It creates mechanical and electrical hardware systems, components, and both basic and specialised software solutions. It is among one of a few companies globally that is capable of designing high-power-density electric vehicle (EV) systems that can handle substantial torque demands while maintaining a lightweight structure.
Market cap: INR 32,993.22 crore
Net profit: 15.7%.
- Endurance Technologies
Started its journey with the aluminium business in 1985, today, Endurance Technologies is one of the largest auto-components companies in India. It offers comprehensive solutions for aluminium die-casting, brakes, transmission products and many more such products. It serves as a Tier 1 supplier to well-known Indian and global brands in the automotive industry, covering two, three, and four-wheeler vehicles.
Market cap: INR 24,170.80 crore
Net profit: 6.01%.
- MRF Limited
Madras Rubber Factory Ltd (MRF) is India’s largest tyre manufacturing company. In addition to producing a wide range of tyres, the company supplies various vehicle components and holds the position of the largest in-house original equipment manufacturer (OEM) in the Indian automotive industry.
Market cap: INR 45,951.98 crore
Net profit: 3.55%.
- Amara Raja Batteries Limited
Amara Raja Batteries Limited, as its name implies, specialises in providing batteries for automotive and industrial applications. In fact, it is the largest battery manufacturer in India and is an OEM supplier with a client base extending to neighbouring countries.
Market cap: INR 10,852.57 crore
Net profit: 6.44%.
- Rajratan Global Wire
Rajratan Global Wires Ltd specialises in the production of tyre bead wires and related products. The tyre beads are used in automobiles, earth-moving vehicles and aircraft.
Market cap: NA
Net profit: NA
Varroc Engineer Limited
Varroc Engineer Ltd specialises in the design and production of automotive components, including lighting systems, polymer parts, electrical systems, electronic components, and precision metal components for the automotive sector.
Market cap: INR 7,046.51 crore
Net profit: -35.12%.
- Pricol Limited
Pricol Ltd produces and delivers precision engineering components to OEMs in the two-wheeler, four-wheeler, passenger, and commercial vehicle sectors, as well as in farm equipment and other sectors.
Market cap: INR 4,480.36 crore
Net Profit: 5.83%.
Conclusion
When making investment choices in Indian auto ancillary stocks, it is crucial to expert advice while analysing the company's financial history over the previous five years. These include reviewing the balance sheet, profit and loss statement, cash flow statements, and other important factors. You can obtain this information by visiting the company's official website or reputable stock market websites where their annual reports are available. Furthermore, for a better understanding of the company's recent developments, it's advisable to also scrutinise their latest quarterly financial results before investing.
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Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.