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India Auto-Component Outlook Improves as Earnings Momentum Strengthens
Jefferies expects India’s auto-component companies to perform well.
These companies make parts used by vehicle manufacturers.
In the June quarter, their sales grew more slowly than those of auto makers.
However, their operating profits grew faster.
Their profit margins also stayed mostly steady even as commodity prices increased.
Auto makers saw their margins decline, especially in passenger vehicles.
Analysts became more positive about the companies’ future earnings in the September quarter.
Jefferies said stronger profits, stable margins and expanding business opportunities could support the sector.
The main caution is that many of these companies are already valued above their usual long-term levels.
Jefferies said India’s auto-component sector could sustain earnings momentum despite valuations above long-term averages.
Twenty leading component companies recorded 21% revenue growth year-on-year in the June quarter, excluding Motherson.
Component companies’ aggregate EBIT rose 19%, compared with 10% growth for auto OEMs excluding JLR.
Component-company EBIT margins stayed broadly flat despite sharply higher commodity prices, while OEM margins fell 1.5 percentage points.
Nine of 20 companies received FY27 consensus EPS upgrades above 3% in the September quarter, compared with five downgrades.
- Who
- Jefferies and 20 leading Indian auto-component companies.
- What
- Jefferies reported stronger profit growth and improving earnings expectations for India’s auto-component sector.
- Where
- India.
- When
- The analysis covered the June quarter, with earnings-estimate changes recorded in the September quarter; the report was published September 5, 2026.
- Why
- Stronger operating-profit growth, resilient margins and expanding business opportunities improved the sector’s outlook, although valuations were above long-term averages.
Growth outlook
Valuation caution
Sector prospects
Growth outlook
Jefferies said stronger earnings growth, resilient margins and an expanding business footprint could support the sector in coming quarters.
Valuation caution
The sector’s valuations have moved above their long-term averages, which may limit the benefit of its improved outlook.
Profitability comparison
Growth outlook
Auto-component companies grew aggregate EBIT by 19% and kept margins broadly flat despite higher commodity prices.
Valuation caution
Their revenue growth was 21%, below the 29% growth recorded by auto OEMs excluding JLR, showing that stronger profitability did not come from faster sales growth.
Key facts
- June-quarter component revenue growth
- 21% year-on-year, excluding Motherson
- June-quarter component EBIT growth
- 19% year-on-year
- OEM EBIT growth
- 10% year-on-year, excluding JLR
- Component-company margins
- Broadly flat year-on-year despite sharply higher commodity prices
- FY27 EPS upgrades
- Nine of 20 covered companies received upgrades of more than 3% in the September quarter
- FY27 EPS downgrades
- Five of 20 covered companies received downgrades in the September quarter
- Valuation
- Covered auto-component companies were trading above their long-term average valuations










