Auto Ancillaries Stocks

In the past years, India has become the fastest-growing economy in the world. This growth, together with rising incomes, a boost in infrastructure spending and increased manufacturing incentives, has bolstered the automobile industry. The auto component and ancillary business in India is a significant driver of employment and macroeconomic growth. The sector is made up of participants of all levels, ranging from microbusinesses to major enterprises, dispersed over several regions of the nation.

The auto component industry is mainly classified into organised and unorganised sectors. While the organised sector serves OEMs and includes high-value precision instruments, the unorganised sector consists of low-valued items and mostly serves the aftermarket category.

India has a competitive edge in auto components categories such as shafts, bearings and fasteners because of a large number of players. This factor is likely to aid higher exports in the coming years. The auto component exports are expected to grow and reach US$ 30 billion in FY 2026. In addition, 4 million EVs could be sold each year by 2025 and 10 million by 2030. The market is likely to reach US$ 206 billion by 2030. The growing working population and expanding middle class are likely to remain key demand drivers.

Investing in the auto ancillaries sector can be a lucrative but challenging endeavour. Before making any investment decisions, it’s essential to carefully consider various factors to make informed choices. Here are some key considerations before investing in auto ancillaries sector stocks:

• Industry Overview: Understand the overall health and trends of the auto industry. Analyse factors such as vehicle sales, demand, and technological advancements.
• Economic Factors: You should consider the economic conditions and their impact on the automotive sector. Economic downturns can lead to decreased consumer spending on automobiles, affecting ancillary businesses.
• Regulatory Environment: You should stay informed about government regulations and policies related to the automotive industry, emission standards, and safety regulations. Changes in regulations can significantly impact the sector.
• Financial Health of Companies: You should analyse the financial statements of potential investments. Look for consistent revenue growth, profitability, and a strong balance sheet. Pay attention to debt levels and liquidity.
• Risk Management: It is required to assess and manage risks associated with currency fluctuations, interest rates, and other macroeconomic factors that can impact the sector.

To invest in sector stocks via Angel One, follow these steps:

• Log in to your Angel One account.
• Click on the search icon and look for your desired auto ancillaries sector stock.
• Now, place your buy order. Simply click on the ‘Buy’ button, enter your desired quantity, and select the order type.
• To complete your transaction, click on the ‘Buy’ button.

You can track the status of the purchase from the ‘Positions’ section in the ‘Orders’ module. Once the stock is delivered, you can track its gains and losses from your ‘Portfolio.’