Auto Part Makers Drive Nearly Half of India's Auto Deals Since FY22

Auto component makers have attracted more deals than any other segment of India's automobile industry since FY22, and their stocks have beaten every other auto index over the past year, according to Equirus Capital's automobile sector tracker for June 2026.

Ancillary companies featured in 69 of the 110 mergers and acquisitions recorded in the sector between FY22 and FY27 so far, and in 19 of the 28 equity capital market transactions. They drew 46 private equity deals, trailing only two-wheeler makers, which drew 54. In all, component makers were at the centre of 134 of the 283 auto deals struck over the period.

They lead on money raised from public markets, too. Component makers mopped up $3.7bn through equity capital markets, the highest for any segment, ahead of the $3.3bn raised by four-wheeler makers. In M&A, the segment's $3.2bn was second only to four-wheelers' $6.1bn, a figure lifted almost entirely by Tata Motors' $4.4bn acquisition of the Iveco Group in July 2025.

The current financial year has opened the same way. Three of the five deals recorded in the first quarter involved component makers. Bosch Ltd bought out Bosch Chassis Systems India for $983mn in April. Rane (Madras) agreed in June to acquire the friction business of Hindustan Composites for $45mn (~ ₹370 crore), a deal Equirus expects will make it the largest friction materials player in the country. Craftsman Automation raised $211mn (~ ₹2,000 crore) through a QIP, largely to repay debt.

Returns Explain Rush

Dealmakers are buying what the stock market has already rewarded. The Equirus auto ancillary index returned 27.9% in the 12 months to July 2, against 13.4% for the Nifty Auto, 19.6% for two-wheelers and 10.3% for four-wheelers, while the Nifty fell 5%. The segment gained 23.6% over three months, nearly double the Nifty Auto's 12.5%, and was the only auto segment in the green over six months.

Behind the returns sits record demand. Auto retail sales rose 9.55% year on year in May to 25.31 lakh units, the best May on record, per FADA. The powertrain mix within those volumes is also diversifying, with EV penetration crossing 11% for the first time and CNG taking 23.34% of car sales in May. Every powertrain that gains share brings newer component categories that the industry did not supply a decade ago.

Equirus's sector note on auto ancillaries, published on June 8, traces how far that evolution has run. The listed component industry's revenue tripled between FY16 and FY26, compounding at 11.5% a year, faster than the vehicle makers it supplies. The note attributes the growth to rising content per vehicle, driven by SUV penetration, electronics and aluminium, and to exports, which also tripled over the decade and turned the industry's trade balance into a surplus.

Buyers and investors are getting a healthier industry as well. The sector enters FY27 with net debt at 0.18 times operating profit, its most conservative level in a decade and roughly a third of the FY22 reading, per the note. Consensus estimates project 21% annual profit growth for the universe over FY26 to FY28, and the segment trades at 24 times estimated FY28 earnings.

Little in the pipeline suggests a pause. FY26 produced the period's record M&A value of $5.8bn, and the two most recent ancillary listings, Tenneco Clean Air India in November 2025 and SEDEMAC Mechatronics in March 2026, came within five months of each other. India's auto story, the deal street seems to have concluded, is best bought one component at a time.