India’s Auto‑Component Industry Gains a Profit Edge, Says Jefferies

When you sift through the numbers for June‑quarter 2026, a clear picture emerges – India’s auto‑component manufacturers are pulling ahead of the original equipment makers on the profit front, even though their top‑line growth has been a bit more modest.

Jefferies highlighted that a basket of 20 leading component firms saw revenue rise about 21% year‑on‑year, a shade slower than the 29% jump recorded by auto OEMs (excluding JLR). Still, the profit story tells a different tale: aggregate EBIT for the components crowd climbed roughly 19% YoY, comfortably eclipsing the 10% rise posted by the OEM group.

What’s striking is how the component makers managed to keep their EBIT margins roughly flat despite a sharp uptick in commodity prices, while OEM margins slipped by 1.5 percentage points – largely driven by a 15% decline in passenger‑vehicle earnings.

Looking ahead, the outlook appears brighter. In the September quarter, nine of the 20 component companies enjoyed FY27 consensus EPS upgrades of more than 3%, whereas only one saw a similar upgrade back in June. Five firms faced downgrades, but the net shift points to growing confidence among analysts.

Valuations for these component firms have drifted above their long‑term averages, yet Jefferies argues the sector’s growth prospects remain solid. The ability to translate revenue gains into robust operating profit, while holding margins steady amid cost pressures, should keep earnings on an upward trajectory.

In short, the combination of stronger earnings growth, resilient margins and an expanding business footprint is setting the stage for continued momentum in India’s auto‑component space.