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India’s auto component manufacturers stand at the forefront of the country’s manufacturing sector, having nearly doubled in size over the past five years and clocking a turnover of ₹6.73 trillion ($80.2 billion) in FY25—a 9.6% year-on-year rise – with a healthy CAGR of 14% since FY20.

This remarkable growth is powered by robust domestic demand, technology advancements, and increased exports, which surged 8% to $22.9 billion in FY25, resulting in a trade surplus of $453 million. The aftermarket segment, catering to spares and vehicle repairs, grew 6% to ₹99,948 crore as used vehicles and formalized repair networks expanded nationwide.

Auto component firms face several structural difficulties. These include global supply-chain vulnerabilities (exacerbated by geopolitical tensions), moderate R&D spending (averaging only 1-3% of revenue versus global peers), and high raw material dependencies, notably on rare-earth magnets—essential for EV parts—whose limited domestic availability poses a strategic risk for the sector’s future growth. In addition, disruptions such as rising ocean freight costs and commodity price volatility have stressed margins, especially for export-focused players.

To overcome these hurdles, manufacturers are accelerating localisation, upgrading technology, and capturing new export opportunities in emerging markets like Brazil, Africa, and Europe. NSE-listed component stocks—such as Motherson Sumi, Bosch, Bharat Forge—have largely outperformed broader industry benchmarks due to strong aftermarket demand, OEM partnerships, and resilient operating margins (often above 11–12%). Investments into advanced manufacturing and EV platforms are fast increasing, with capex of ₹150–200 billion in FY25.

Recently, US tariffs (up to 50%) on Indian auto components have dampened exports and squeezed profits for players heavily reliant on the American market, though companies are vigorously diversifying their export bases. On the policy front, imminent GST 2.0 rationalization—lowering cess and GST rates for many vehicle and allied parts—aims to lighten manufacturers’ fiscal load, spurring fresh investment and demand.

With these factors in mind, we have selected a few stocks from the sector that hold the promise of upside in the coming months.

Buy above ₹6,920 and on dips near ₹6,500; target: ₹7,500-7,800; stop loss: ₹6,400

Buy above ₹725 and on dips to ₹690; target ₹795-835; stop ₹670

Buy above ₹1,175 and on dips to ₹1,120; target ₹1,295-1,325; stop ₹1,098

Despite persistent headwinds, Indian auto component makers have shown remarkable resilience, operational agility and steady growth in 2025. Backed by strong government support, robust domestic demand, and deepening export diversification, their stocks continue to perform well on the NSE, as the sector strides into new-age mobility.

Raja Venkatraman is co-founder, NeoTrader. His Sebi-registered research analyst registration no. is INH000016223.

Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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