While October 2026 delivered healthy gains for passenger, commercial, and two-wheeler segments, tractor sales experienced double-digit volume drops. Brokerage Monarch Networth Capital anticipates broader sales will moderate post-festivities as order backlogs and inventory levels normalize. To navigate this deceleration, the brokerage recommends auto ancillary firms like Minda Corporation, RK Forgings, and Sundram Fasteners. These specific component suppliers are well-positioned for upside potential reaching up to 44% due to content expansion, casting projects, and non-automotive revenue streams.
Key points
Overall vehicle volume growth is expected to taper off in the second half of fiscal year…: Overall vehicle volume growth is expected to taper off in the second half of fiscal year 2027 against elevated comparative bases.
Commercial vehicle momentum was sustained in October by heightened infrastructure spendin…: Commercial vehicle momentum was sustained in October by heightened infrastructure spending and freight operations across major original equipment manufacturers.
Investors are encouraged to focus on component makers with internal growth drivers, such…: Investors are encouraged to focus on component makers with internal growth drivers, such as export expansion and rising vehicle content, rather than pure-play automakers.
Sources checked by our analysis pipeline: 1
Against this backdrop, MNCL prefers diversified auto ancillary companies that have multiple growth drivers, including an increase in content per vehicle, rather than relying solely on underlying industry growth. The brokerage has named Minda Corporation, RK Forgings and Sundram Fasteners as its top picks from its coverage universe, citing their potential to outperform the broader automobile industry.
The brokerage has maintained a Buy rating on all three stocks, with a target price of Rs 985 for Minda Corporation, Rs 805 for RK Forgings and Rs 1,315 for Sundram Fasteners. The stocks offer potential upside of up to 44%, 16% and 23%, respectively, according to MNCL. It also considers valuations at current market prices attractive for all three companies.
Minda Corporation is expected to deliver strong growth through increasing content per vehicle. RK Forgings is positioned to benefit from healthy new order bookings and expansion in casting, while Sundram Fasteners is expected to gain from export orders and diversification into non-automotive segments.
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