Auto Ancillary sector seen revving up?

Auto sales have been robust, with Maruti clocking 160k and Hero Moto at 715k in Sep 2020, their highest sales in the last 12 months. Strong numbers were reported across the board whether its 2W, 4W, PV, CV or Tractors. This trend is likely to continue in the festive time combined with people’s preference shifting to personal mobility vs mass transit.

This is welcome news for their suppliers who were hit especially hard with Covid induced lockdown and subsequent localized lockdowns as well. Most of the auto ancillary players are smaller names but plentiful (70-75 stocks available in listed space alone). The few results reported for Q2 FY21 are already showing this trend.

Numbers of Samkrg Pistons, Subros, Menon Bearings, Rane Madras, Steel Strips Wheels and Wabco have reaffirmed the growth returning to the sector and likely to continue well into FY22. Infact, co-operation of these ancillaries units, having been asked for by OEMs till June 2020 quarter, is now being repaid with earlier margins and orders at pre Covid levels.

So, with Auto Ancillary stocks revving up with OEMs, we are expecting a joyful ride in these stocks ahead. The above mentioned stocks are NOT recommendations and should not be construed as advise and we only provide stock recommendations to our members through member zone sections.