Best Auto Ancillary Stocks Based on 5Y-CAGR

The Indian auto ancillary sector supports the country’s booming automotive industry. It is primarily driven by strategic partnerships and in-house research and development established by industry players. This article will explore the lucrative investment opportunities in the best auto ancillary stocks and provide an industry overview. Let us now have a look at the best auto ancillary stocks based on 5Y-CAGR.

Top Auto Ancillary Stocks Based on 5Y-CAGR – June 2024

Note: The stocks mentioned above have been selected from the Nifty 500 universe and sorted on the basis of 5Y-CAGR as of June 14, 2024.

1. JBM Auto Ltd: JBM Auto Ltd is engaged in the manufacturing and sale of sheet metal components, tools, dies and moulds, and buses, including the sale of spare parts, accessories and maintenance contracts for Buses. Recently, JBM Ecolife Mobility Private Limited, a subsidiary of JBM Auto Limited, has secured a contract to act as a bus operator for the Procurement, Supply, Operation and Maintenance of 1,390 Electric Buses and the development of allied electric and civil Infrastructure on Gross Cost Contracting under the PM-eBus Sewa Scheme.

Key Metrics

• ROE: 16.3%
• ROCE: 14.6% 

2. Uno Minda Ltd: Incorporated in 1985, Uno Minda Ltd is a manufacturer and supplier of Automotive Solutions and systems to Original Equipment Manufacturers (OEM). The company recently entered into a Technical License Agreement with Suzhou lnovance Automotive Company Limited for the development and manufacturing of High Voltage-Category of 4W PV & CV EV Powertrain Products like Combined Charging Units, E Axle, Inverter, Motors, etc.

Key Metrics

• ROE: 18.9%
• ROCE: 20.0% 

3. Schaeffler India Ltd: Schaeffler India Ltd develops, manufactures, and distributes high-precision roller and ball bearings, engine systems and, transmission components, and other auto components. During Q1 CY2024, the company witnessed robust YoY growth in domestic business at 12.4%, broad-based across businesses. It continued to focus on portfolio expansion and penetration through range extension.

Key Metrics

• ROE: 20.0%
• ROCE: 26.7% 

4. Minda Corporation Ltd: Minda Corporation Ltd is one of the leading automotive component manufacturing companies in India with a pan-India presence and international footprint. In the two-wheeler segment, volume growth was driven by consistent demand in the domestic market and continued demand for entry-level motorcycles.

Key Metrics

• ROE: 12.7%
• ROCE: 15.1% 

5. ZF Commercial Vehicle Control Systems India Limited: ZF Commercial Vehicle Control Systems India Limited, formerly WABCO India Limited, is an India-based company that primarily manufactures air brake actuation systems for commercial vehicles. The company possesses strong cost competitiveness across the value chain and is well-positioned to serve marquee clients with a broad market focus.

Key Metrics

• ROE: 15.6%
• ROCE: 20.9% 

Overview of the Auto Ancillary Industry

The auto component sector in India is a significant engine of employment and macroeconomic growth. The industry’s players are large enterprises and small businesses alike, and they are dispersed across several regions of the nation. The auto parts industry will account for 5-7% of India’s GDP by 2026.

By 2026, 3.2 million additional direct jobs are expected to be created, according to the Automotive Mission Plan (2016–26).In terms of exports, the sector leads and employs more than 3.7 crore people. The industry saw a CAGR of 6.35% from FY16 to FY22, and in FY22, it was valued at US$56.50 billion. The expected export value of car parts and components in the April–September period of 2023 was US$10.4 billion.

The auto component business is predicted to increase by double digits in FY 2022 since all vehicle industry categories have strong development potential. The sector is anticipated to reach $200 billion by FY 2026.

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.