Auto ancillary soon to encash from the domestic auto sector
The well known auto ancillary enterprises have not performed up to the standard, ET Auto Index, set by the auto firms in the last three months. The companies dealing in components trade with the price earning at a multiple of 24 are at discounted average of price earning of 30 for the automobile enterprises.
As per the sources, at present nothing can be commented on the auto ancillary that if in the future, it will earn more profits than the automakers in the coming times. Hoewever the financial performance of these ancillary has improved in the last quarter sales. If looked at the total sales of 15 on listed ancillary which includes names such as Bharat Forge, Bosch, Amtek and Motherson, showed a raise of 42 per cent while net profit rose to 39 per cent.
Against the enlisted auto companies sales and profits of the seven auto biggies Maruti Suzuki, Mahindra Mahindra, Tata Motors and Hero Honda were far behind the sample of the auto ancillary, the sales recorded a growth of 34 per cent and net profit of 27 per cent.
Fate of ancillary units greatly depends on automakers. But now the various other auto players (non established) are also playing an important part in increasing the demand. With the markets expansion various auto players are entering the Indian car market sometime from now. They are growing slowly but the demand from these small auto players is increasing.
The auto ancillary market is witnessing a higher demand in after sales auto market which is called as replacement market. It can be credited to the share of an unorganized auto part industry which is sloping down because of the changing preferences by the car owners.
Less price is a concern but the ancillary makers are confident of compensating that by achieving it through large scale production. It will greatly help in sailing smooth in the Indian auto market.
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