India's Auto Ancillary Sector Triples Revenue in a Decade to ₹5 Lakh Crore, but Growth Diverges Sharply Across Segments

India's listed auto ancillary sector has recorded robust expansion over the past ten years, with aggregate revenues growing at an 11 per cent compound annual growth rate (CAGR) to reach approximately ₹5 lakh crore by FY26, according to a report released by Equirus Securities. However, the headline number conceals a pronounced divide in performance across the sector's constituent companies and segments.

Of the 52 listed companies tracked in the study, 28 outgrew the sector average while 24 fell short. The Electricals and Lighting segment led with a 17 per cent CAGR over the period, while the Batteries segment lagged at 8 per cent. The report identifies revenue base breadth, rather than OEM relationships or market share, as the most consistent differentiator between outperformers and laggards.

Diversification and Content Growth Drive Outperformance

The report draws three central lessons from the decade. First, companies that deployed multiple growth levers simultaneously, including acquisitions, new product development, geographic expansion, and customer diversification, outperformed those relying on a single driver in every down-cycle. Businesses concentrated in a single OEM, product, or geography faced disproportionately steeper declines during sector slowdowns.

Second, rising content per vehicle emerged as the decade's most durable growth driver, operating independently of OEM volume cycles. Structural tailwinds from vehicle premiumisation, electric vehicle (EV) adoption, and connected technologies compounded steadily, while regulatory-driven content additions delivered a one-time uplift before normalising.

Third, the report notes that market valuations in FY26 increasingly reflected forward narratives. Companies delivering earnings upgrades for FY27 are converting those narratives into tangible returns, while those facing estimate cuts despite prior re-ratings are finding the market has already priced in optimism that has yet to materialise.

Sector Enters FY27 With Strongest Balance Sheet in a Decade

On the financial health front, the sector's net debt-to-EBITDA ratio stood at 0.18x as of FY26, down sharply from 0.49x in FY22, its best reading in ten years. The report projects a 21 per cent PAT CAGR for the sector between FY26 and FY28.

Among segments, Body and Glass is flagged as the most compelling valuation opportunity, with a projected 30 per cent PAT CAGR and above-average growth at a below-average multiple. Electricals and Lighting, along with Suspension and Chassis, are identified as high-conviction segments, supported by EV content additions, premiumisation, and improving free cash flow profiles.

Stock Calls

For long-term positioning, Equirus names UNO Minda, Endurance Technologies, and Varroc Engineering as preferred ideas. Apollo Tyres, CEAT, MRF, and Motherson Sumi Wiring India are flagged as tactical opportunities.

The brokerage adopts a cautious stance on Bharat Forge and Sansera Engineering, noting that while the long-term thesis remains intact, current valuations price in outcomes not yet reflected in earnings. On Amara Raja and Exide, the report acknowledges commitment to the lithium-ion transition but flags execution timelines as longer than the market currently anticipates.