Strong recovery likely to continue for auto ancillary companies

Good export demand, likely Q2 uptick, low interest rates are positive

There’s an interesting divergence of opinions on the auto-ancillary sector. Some analysts and fund managers believe the sector is likely to continue a strong recovery. On the other hand, India Ratings & Research has issued an advisory saying there will be a contraction in the first quarter of financial year 2021-22 (Q1FY22). The longer-term prospects seem good.

The Q4FY21 results were very encouraging. For a sample of 73 auto-ancillary manufacturers, combined revenues rose 36 per cent year-­on ­-year (YoY) to Rs 58,610 crore and PBDIT was up 84 per cent at Rs 7,551 crore, with PAT up 400 per cent