Exploring Investment Opportunities: Auto Ancillaries vs. OEMs – Which Sector Holds More Promise?

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  • The Indian automobile industry has seen significant growth due to improved economic conditions and technological advancements.
  • Motilal Oswal predicts a slowdown in growth rates for FY25, but maintains a positive long-term outlook for the sector.
  • “The auto component industry is set to double its investment in the next five years, reflecting strong growth prospects,” according to Motilal Oswal.

This article provides an in-depth analysis of the Indian automobile industry’s growth trends, with insights from leading brokerage firm Motilal Oswal.

Indian auto industry: Near-term softness likely; long-term outlook intact

While the Indian automobile industry has shown robust growth, a temporary slowdown is expected in FY25. Despite this, the long-term prospects remain strong, supported by sustained demand and strategic investments.

Auto Component Sector: A Beacon of Sustained Growth

The auto component sector in India is poised for a significant expansion. Factors such as global supply chain diversification and government initiatives like ‘Make in India’ are expected to drive growth. The sector’s focus on innovation and quality enhancement further solidifies its growth trajectory.

Valuation and top picks

Within the auto ancillary sector, firms like Craftsman Automation, Samvardhana Motherson, and Happy Forgings are highlighted as top picks by Motilal Oswal, due to their strategic positioning and growth potential in both domestic and international markets.

Conclusion

The Indian automobile industry, particularly the auto component sector, is expected to continue its growth momentum. Strategic investments and favorable market conditions are likely to propel the industry forward, making it a lucrative area for investors.

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