Top auto ancillary stocks to watch out for as demand for sunroof equipped car surges

The Indian automotive market has witnessed an interesting trend in recent years – rising demand for cars with sunroofs. More and more car buyers have shown interest in models with panoramic sunroof.

As a result, car manufacturers are forced to bring this feature even into low-segment vehicles, including Tata Punch, Hyundai Exter and recently launched Mahindra XUV 3XO. Earlier, the feature was limited to luxury cars and a few premium models.

As per a July 2023 report by Jato Dynamics, a business intelligence firm, around 25% of cars sold in India have a sunroof. This is a significant increase from the mere 7% reported five years ago. In models that have sunroofs as standard, sales have soared by up to 55%.

When Hyundai recently opened bookings for its all-new Creta, more than 70% of the demand came for variants with sunroofs. Similarly, the Maruti Suzuki Grand Vitara, Hyundai Verna, and Tata Altroz are witnessing 40-95% of their sales coming from sunroof-equipped models.

Rising demand for sunroofs a boon for auto OEMs

The surge in demand for sunroof-equipped cars has not only reshaped the Indian automotive landscape but also proved to be a boon for automotive OEMs making car sunroofs, helping their shares to surge significantly over the past year. The passenger car market in India has seen a range of models equipped with sunroofs over the past few years, and this trend is expected to continue in the future as OEMs are investing heavily to expand and establish their facilities in the country.

Here’s a look at the performance of top seven automotive OEMs likely to benefit from the rising demand for cars with sunroofs.

Minda Corporation Ltd

Minda Corporation shares have surged about 26% in the last 6 months and 54% in the past year. The stock has gained 12% so far this year.

Samvardhana Motherson International

Samvardhana Motherson International, formerly known as Motherson Sumi Systems Ltd, signed an agreement in July 2023 to acquire 81% stake in Honda Motor Co subsidiary Yachiyo's four-wheeler business housed under Yachiyo Industry Co Ltd. Yachiyo is into manufacturing automobile parts like sunroofs, fuel tanks and resin products.

Samvardhana Motherson International shares have zoomed over 23% this year and over the past 6 months, 46%.

Gabriel India Ltd

In May 2023, Gabriel India signed a technical collaboration and alliance agreement with the $1.5 billion Dutch-based Inalfa Roof Systems (Inalfa) to manufacture sunroofs for the fast-growing Indian automotive market.

The automotive OEM firm has seen its shares surge by over 120% in the last one year. However, in the past 6 months and year-to-date, the stock has fallen 9% and nearly 7%, respectively.

Saint-Gobain Sekurit Ltd

Saint-Gobain Sekurit sees further demand growth for automotive sunroofs in India. The company predicts customers opting for sunroofs with new features like fixed laminated sunroofs with heat-cutting special coatings, light-in-glass features, and on-demand transparency change.

In August 2023, the company revealed a robust investment plan for its India operations. According to a PTI report, the company had revealed to invest ₹8,000 crore in its business operations in India towards capital expenditure on capacity expansion and acquisitions.

The company's shares have gained nearly 11% in the past 6 months and over 45% in one year. Its year-to-date return, however, has been negative.

CIE Automotive India Ltd

CIE Automotive India Ltd, an MNC and a subsidiary of the CIE Automotive Group of Spain, is one of the leading suppliers of car sunroofs and other key components to car manufacturers. In contrast to peers, the OEM firm has seen its shares fall over the past 6 months and 1 year.

To sum up

The OEMs and auto ancillary companies dealing in manufacturing and supply sunroofs to carmakers are likely to remain under the radar of the investors due to the growth prospects in the sector. The companies boosting manufacturing capacity and expanding operations through tie-ups and acquisitions also indicate a promising future for the leading players in the segment.