Best Auto Ancillary Stocks To Buy in 2023
ACMA, or Automobile Component Manufacturers Association, estimates that by the year 2026, the export of Indian auto components is expected to be USD 80 Billion, and the auto ancillary stocks in India are expected to be USD 200 cr. So what exactly are auto-ancillary companies? Auto ancillary companies are essentially businesses that deal with the manufacturing and production of various auto vehicular parts. These can include a variety of components such as engine parts, tyres, batteries, brakes etc.
Best Auto Ancillary Stocks
Why is it essential and beneficial for individuals to invest in the best auto ancillary stocks? The auto ancillary sector contributes to about 2.3% of the Indian GDP; moreover, it creates employment opportunities for around 1.5 million people. Hence, the industry in itself can be quite fruitful as an investment option for investors. The industry, more so, needs funds in order to continue the rise in growth and development of its contribution to the country.
Following are some of the top options for people looking to invest in the best auto ancillary stocks in 2023:
Bosch Limited is one of the top options for auto ancillary stock investment. The company deals with multimedia players, electrical systems and other accessories that are needed in a vehicle. The company presently has a market cap of INR 50,983 cr and gained a net profit of INR 1,218 in the financial year 2022.
Madras Rubber Factory or MRF Limited is the biggest tyre manufacturing company in India. The company also offers several other parts needed in various types of vehicles and is also the biggest in-house OEM of the automobile sector in the country. The company gained a net profit of about INR 174.83 cr in the financial year 2022.
Balakrishna Industries Limited specializes in the production of tyres used for purposes such as agriculture, construction and mining. The company is extremely known in the Indian auto ancillary sector, with products selling in 130 countries worldwide. The company experienced a profit per cent of 5.85% in the financial year 2022 with total revenue of INR 2165.57 cr.
The Amrra Raja Batteries limited, as the name suggests, is a supplier of batteries for automotive and other industrial purposes. The company is, in fact, the largest manufacturer of batteries in India. It is an OEM supplier with reach to several neighboring countries in terms of clients. In the third quarter of the financial year 2022, the company earned a total profit of INR 2.21 billion.
Motherson Sumi Systems Limited is one of the top OEM manufacturing companies in India. The products and services offered by the company include mirrors, HVAC systems, bumpers, wiring etc. The company has a reach across several countries outside India. Motherson Sumi has a market cap of INR 51,128 cr with a net profit of INR 411 crore in the financial year 2022.
Minda industries limited is one of the top suppliers of OEM for automobile manufacturing companies in India. The products of the company include batteries, switches, alloy wheels, lights, and other such products. The market cap of the company is INR 31,492 cr with a total profit of INR 356 cr in the financial year of 2022.
The aforementioned companies are the current leading options in the auto ancillary sector and are hence the best auto ancillary stocks to buy in India in 2023. They are a wise investment option for stock investors looking for best auto ancillary stocks.
Finally, the auto ancillary stock industry of India is essentially supported by the demand for products by automotive manufacturers; moreover, the USD 200 million invested in the sector by the department of heavy industries and public enterprises surely helped keep the growth and power intact. The top auto ancillary stocks are also heavily dependent on the automotive sector and its performance in the market, as the need for vehicles in the market is subject to fluctuations. The investment is, nevertheless, a secure and wise way for a passive income option.
1. Which are the top gainers and losers in the auto ancillaries’ sector today?
Some of the top gainers in the auto ancillary industry include Minda, Bosch, Motherson Sumi etc., whereas the top losers of the industry include companies such as Setco, Rico, Bharat Gears, etc.
2. How should you value auto ancillaries’ companies?
Some of the common methods to evaluate an auto ancillary company is by looking at the past five years' revenue and profit growth, debt-to-equity ratio, the ROE or return on equity and the inventory turnover ratio.
3. Which are some important indices one should track?
Some of the common indices followed by people are the NASDAQ, the FTSE 100 index, S&P 500, the Dow Jones Industrial Average, Russel Indexes etc.
4. How has the recent trend towards electric vehicles impacted the auto ancillary industry?
With the rise of EVs or electric vehicles as transport systems, individuals can see the effect of the auto ancillary industry. The manufacturing of the electric parts of the vehicle, such as the battery or motors, will no doubt see a rise while other components manufacturing will remain neutral or may see a decrease in production.
DisclaimerInvestment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.
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