India's listed auto ancillary sector has nearly tripled its revenues to approximately ₹5 lakh crore over the past decade, clocking an 11% compound annual growth rate (CAGR) between FY16 and FY26, according to a report released on Thursday, 11 June. The findings, published by Equirus Securities, position the sector as one of India's most resilient industrial stories of the past ten years.

Strong Growth Trajectory Ahead

The Equirus Securities report projects the sector will sustain its upward momentum, forecasting a 21% profit CAGR during FY26–28. Key drivers include rising vehicle content per unit, premiumisation trends, expanding export opportunities, and accelerating adoption of electric vehicles (EVs).

Among the segments identified as most attractive, Body & Glass stands out with an estimated 30% profit CAGR over FY26–28. Electricals & Lighting and Suspension & Chassis were also flagged as preferred segments, given their exposure to long-term structural growth drivers including electrification and rising electronics content in vehicles.

Segment-Level Performance Varied

While the overall sector delivered strong growth over the decade, performance diverged sharply across categories. Electricals & Lighting emerged as the fastest-growing segment with a 17% revenue CAGR, while Body & Glass recorded a 12% CAGR. At the other end, batteries lagged the broader industry with just 8% growth — a notable gap that underscores how regulatory and technology cycles unevenly affect sub-sectors.

Of the 52 companies covered in the report, 28 outperformed the sector's average revenue growth during FY16–26. The common thread among outperformers was diversification — businesses that grew through acquisitions, product additions, new customer wins, and geographical expansion consistently generated stronger returns than peers relying on a single growth lever.

Exports and Localisation Drive Expansion

Exports emerged as a significant contributor to the sector's decade-long expansion, alongside increasing localisation and value addition across the automotive supply chain. The report notes that growth tied primarily to regulatory changes — such as emission-norm upgrades — tended to normalise once those mandates were implemented, making structural diversification a more durable growth engine.

Premiumisation and the rising electronics content per vehicle created compounding structural tailwinds for component manufacturers. This is particularly relevant as automakers globally shift toward software-defined vehicles, increasing the addressable opportunity for Indian suppliers.

Balance Sheet at Its Strongest in a Decade

The sector enters FY27 with its healthiest financial position in ten years, according to the report. Net debt-to-EBITDA improved to 0.18 times in FY26, down sharply from 0.49 times in FY22, reflecting stronger operating cash flows, reduced leverage, and more efficient working capital management. This deleveraging positions the sector well for the next investment cycle, particularly as EV-related capex requirements intensify.

With balance sheets cleaned up and demand tailwinds intact, the auto ancillary sector appears poised to enter a new phase of growth — one driven less by volume and more by value.