The auto ancillary industry in India has been experiencing significant growth in 2024. This growth is driven by a constant increase in automobile demand among global exports and the growing middle-class segment. With the automotive industry booming, interest in auto ancillary stocks among investors is also increasing.

One of the primary reasons for the rising interest in auto ancillary stocks is the industry’s focus on forming strategic partnerships and investing in research and development. In this article, we will explore the popular auto ancillary stocks in India according to their five-year compound annual growth rate.

The trending auto ancillary stocks have been chosen from the index Nifty 500 on the basis of a 5-year CAGR metric. The data is updated as of July 2024.

• JBM Auto Ltd.
  JBM Auto Ltd. is one of the companies in India that manufactures and sells sheet metal tools, tools, moulds and dies, and buses, including selling accessories and spare parts and offering maintenance services for buses. Recently, a subsidiary of the company, JBM Ecolife Mobility Private Limited, acquired a contract to be a bus operator for procuring, supplying, operating, and maintaining over a thousand electric buses. The subsidiary will also be involved in developing associated civil and electrical infrastructure under the government’s PM-eBus Sewa Scheme.
  

The JBM Auto Ltd. auto ancillary stock has an ROE (return on equity) of 12.87% and an ROCE (return on capital employed) of 13.01%.

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• Uno Minda Ltd.
  Uno Minda Ltd. was incorporated in the year 1985. The company is into manufacturing and supplying automotive systems and solutions to other OEMs (Original Equipment Manufacturers). Recently, the business has also agreed to collaborate with the Chinese company, Suzhou lnovance Automotive Company Limited, to develop and manufacture 4W passenger, commercial, and electric vehicle powertrain products, such as e-axles, motors, inverters, combined charging units, etc., in the high-voltage (HV) category.
  

The Uno Minda Ltd. auto ancillary stock has an ROE of 14.90% and an ROCE of 15.92%.

• Schaeffler India Ltd.
  This company is primarily concerned with the development, manufacturing, and distribution of engine systems, high-precision ball and roller bearings, transmission components, and other auto ancillary components. It has recently experienced solid year-over-year growth owing to a continued commitment to range extension and portfolio expansion.
  

The Schaeffler India Ltd. auto ancillary stock has an ROE of 19.98% and an ROCE of 26.99%.

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• Minda Corporation Ltd.
  This company is a leading manufacturer of automotive components in India. It has a presence across the country and a global footprint. Focusing on the two-wheeler category, the company has experienced volume growth owing to increasing domestic demand and continued and steady entry-level motorcycle demand.
  

The Minda Corporation Ltd. auto ancillary stock has an ROE of 18.88% and an ROCE of 15.02%.

• ZF Commercial Vehicle Control Systems India Limited
  Formerly known as WABCO India Ltd., this business is a key manufacturer of air brake actuation systems, which are meant for commercial vehicles. The company has carved a place for itself owing to its competitive pricing, which has also helped the business work with marquee clients.

The ZF Commercial Vehicle Control Systems India Limited auto ancillary stock has an ROE of 15.58% and an ROCE of 21.14%.

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In India, the auto ancillary industry employs a sizable portion of the population and is a catalyst for macro-level growth. The sector itself is quite diverse, with a healthy mix of small and big companies spread across different regions.

It is estimated that by 2026, the auto ancillary industry will expand to become 5%–7% of the country’s GDP. The industry is also a leader in exports. Moreover, the government’s Automotive Mission Plan, launched in 2016 for 10 years, is also aimed at increasing direct employment in the country by creating more jobs.

The sector has experienced significant growth in the past couple of years, but the auto ancillary stock may now slow down a bit. The long-term outlook, however, remains intact and positive.

The industry experienced a CAGR of 6.35% in a six-year period starting in 2016, and its value is only expected to increase even more.

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Conclusion

Indian auto ancillary stocks are vital to the equity market, and these companies are critical to India’s economic growth, driven by increased demand for automobiles, strategic industry partnerships, and government support. The industry's contribution to GDP and employment is expected to rise, supported by ongoing technological advancements and the expansion of the automotive market both domestically and globally.