According to a report by global brokerage Jefferies, India's auto-component sector has significantly outpaced original equipment manufacturers (OEMs) in operational performance. During the April-June quarter of the current fiscal, auto ancillary companies delivered higher EBIT growth compared to their OEM counterparts. The auto component makers demonstrated better capability to translate top-line growth to EBIT, delivering 19% YoY EBIT growth in the June quarter compared to 10% for OEMs. EBIT growth for OEMs was particularly pulled down by a 15% decline for OEMs of passenger vehicles.
As reported by Jefferies, most auto-component companies have outperformed the Nifty Auto Index on a calendar year-to-date basis. Out of the set of 20 auto-component companies, 16 have outperformed the Nifty Auto Index (-1%) CYTD. The top performers include Sansera Engineering and Sona BLW Precision Forgings, which delivered 60-130% stock returns, followed by 25-50% returns in Craftsman Automation, Motherson Sumi, Belrise, and others. Conversely, among top laggards, MRF and others are down 10-25% CYTD.
According to Jefferies, the sector's current valuations sit above historical long-term averages, but the brokerage views these premiums as supported by robust forward momentum, sticky order books, and an expanding operational footprint across global and domestic markets. The strong calendar year-to-date returns have been driven by a combination of better one-year forward earnings outlook and PE expansion. For the top performing auto-component companies, multiple expansion accounted for 60-75% of stock returns for Sansera Engineering and Sona BLW Precision Forgings.
As reported by Jefferies, among component suppliers, the brokerage highlighted Bharat Forge and Sona BLW Precision Forgings (Sona Comstar) as its preferred ideas within the space. Both players remain positioned to capture market share through high-content product transitions, expanding electric powertrain programs, and deeper penetration into international supply chains. The brokerage also maintains 'buy' calls on Belrise, Motherson Sumi, and Uno Minda. Market appetite has remained firm as component suppliers leverage domestic volume gains alongside structural export diversification.
