How FY25 Reshaped India's Auto Ancillary Sector : EV Currents & Export Crosswinds

Vikas Rajput 2025-07-03

Dark Clouds & Electric Dreams

Fiscal Year 2025 was transformative yet turbulent for India's auto ancillary industry. A sharp revival in domestic automotive demand drove total vehicle production up by 9%, crossing 32 million units.

Yet beneath the headline growth, the story was far more nuanced, revealing stark contrasts among sub-segments, disruptive shifts toward electric vehicles (EV), and intensifying financial pressures.

The automotive sector navigated through a year filled with paradoxes, record-breaking sales and demand fluctuations, cost volatility, and aggressive competition, all while striving to align with rapidly advancing technological shifts towards electrification.

Sector Snapshot: Robust but Uneven Growth

India's automotive sector registered meaningful growth, but the distribution of this growth varied significantly across vehicle categories:

Passenger vehicles experienced modest growth of 3.3%, primarily driven by an 11% surge in utility vehicles that offset a 12.6% decline in passenger cars.
Two-wheelers staged a strong comeback, with production volumes rising by 11.3%, reflecting recovering consumer sentiment and rural economic resilience.
Three-wheelers benefited from EV adoption in public transportation, with sales up by 6.7%.
Commercial vehicles, a critical economic indicator, faced headwinds with a 3.3% production drop, reflecting broader industrial softness.
EV adoption surged notably, with EV sales climbing by 17%, doubling EV components’ contribution to 6% of total production—a clear indicator of the ongoing industry transformation.

Margin Movements: A Tale of Two Extremes

The fiscal year revealed sharp margin divergences across auto component makers, influenced heavily by raw material volatility and shifts in product mix:

Segment	Company	EBITDA Margin FY25	YoY Change	Drivers
Forging	Bharat Forge	28.5%	+1.0 pp	Increased exports, e-mobility demand, operational efficiencies
Forging	MM Forgings	19.9%	+1.0 pp	Shift to high-value machined components, easing raw material prices
Electronics	Centum Electronics	13.6%	+1.2 pp	Defence & aerospace orders, operational efficiency
Tyres	Apollo Tyres	12.1%	-5.6 pp	Rising rubber and crude oil prices, export market slowdown
Tyres	JK Tyre	11.4%	-2.7 pp	Currency depreciation (Peso), US tariff uncertainties
Casting	Alicon Castalloy	11.5%	-1.2 pp	Higher two-wheeler component mix, initial costs for new production lines

Precision forgings and niche electronics manufacturers clearly thrived, benefiting from favorable product mixes and higher-margin segments, while tyre makers and certain casting firms struggled to maintain profitability amid severe input cost pressures.

EV Transformation: Order Books Rewired

Electric vehicles significantly reshaped supplier order books, pulling ancillary players firmly into an electrified future:

Company	EV Order Book/Revenue	Key Projects & Timeline
Sona BLW	77% of ₹24,200 cr	Major North American EV contracts starting Q4 FY26
Uno Minda	₹423 cr capex	High-voltage EV powertrain plant (capacity: 2 lakh units/year), operational by Q2 FY27
Talbros Automotive	₹160 cr EV orders	EV-focused chassis & rubber components ramp-up starting H2 FY26
Endurance Technologies	37% EV orders in FY25	Battery pack facility (35k units/month), premium EV castings from FY26
Divgi-TTS	New EV gearbox orders	Production ramp-up beginning Q2 FY26

Yet alongside optimism, concerns emerged. Permanent Magnets and Precision Camshafts reported slowdowns in EV orders from Western OEMs, highlighting potential risks and uncertainties associated with global EV market dynamics.

OEM partnerships experienced significant realignment:

Supplier → OEM	FY24 Share	FY25 Share	Shift
PPAP → Maruti	57%	38%	↓19 pp
PPAP → Tata	1%	14%	↑13 pp
Talbros → Maruti	14%	17%	↑3 pp
Lumax → M\&M	26%	27%	↑1 pp

PPAP notably shifted focus towards Tata Motors’ SUV surge, strategically diversifying away from Maruti Suzuki’s shrinking share. Lumax strengthened its relationship with Mahindra through strategic acquisitions, especially benefiting from Mahindra’s emerging EV segment, demonstrating how proactive M\&A can reshape competitive positions rapidly.

Export Outlook: Navigating Global Turbulence

Export exposure became increasingly volatile in FY25:

Company	Export Share	Trend & Outlook
Bharat Forge	53.5%	Weakness in North America, cautious outlook for FY26
Sundram Fasteners	30.4%	Robust 12% growth, preparing for US recovery
Rolex Rings	47.9%	EU market sluggishness affecting bearing demand
Rico Auto	16%	Significant declines due to BMW EV order cuts in Europe
S.J.S. Enterprises	7.5%	Strong growth from ASEAN markets for decorative parts
Suprajit	Exceptional growth	35% increase in cable exports to US & EU markets

Export-focused firms navigated macroeconomic headwinds in Europe and North America, with niche exporters like Sundram Fasteners and Suprajit Engineering leveraging targeted growth opportunities amid broader market softness.

Financial Red Flags: Revenue Growth vs. Cash Flow

Despite healthy top-line growth, financial health concerns arose:

SKF India reported an 8% revenue increase but faced concerning cash flow issues due to significant working capital buildup.
Samvardhana Motherson International, despite 15% revenue growth, saw working capital expand by approximately ₹2,000 cr, underscoring increasing pressure from supply-chain risks and inventory management.

These issues highlighted the critical need for prudent financial management amid aggressive expansions and strategic investments.

Investing in the Future: Strategic Bets on Next-Gen Tech

Capex highlighted the industry's decisive pivot toward future-ready technologies:

Company	FY25 Capex	FY26 Planned Capex	Strategic Focus
Uno Minda	₹1,250 cr	₹1,300 cr	EV powertrains, ADAS lighting solutions
Samvardhana Motherson	₹4,433 cr	₹6,000 cr	Semiconductor, aerospace, medical devices
Endurance Technologies	₹611 cr	Increasing significantly	Lithium battery packs, premium EV castings
Bharat Forge	₹750 cr	₹500 cr	E-mobility components, aerospace forgings
Sharda Motor	₹68 cr	₹75 cr (next 2 yrs)	Lightweight exhaust systems, thermal management components

ACMA forecasts industry-wide investments will nearly double, reaching $7 billion by 2030, emphasizing a collective commitment to EVs, lightweighting, thermal management, and other transformative technologies.

The Outlook

FY25 underscored a pivotal inflection point for India's auto ancillary industry. Strategic realignment towards EVs and higher-margin, technology-intensive components is evident. Yet, managing volatile input costs, navigating global export turbulence, and maintaining disciplined financial practices are critical challenges that companies must master to thrive in the years ahead.

Success in the future will belong to agile players who rapidly adapt to shifting OEM preferences, mitigate export risks, strategically invest in new technologies, and maintain robust cash flows, positioning themselves firmly for sustainable long-term growth.

All insights generated exclusively using CompoundingAI's Chat Interface based on corporate filings released by companies in auto anxilliary sector.

CompoundingAI's is vertical-intelligence engine that structures concall transcripts, filings, and presentations into decision-grade outputs within minutes. From auto-built delta tables to forensic screening and earnings-season dashboards, CompoundingAI keeps analysts a step ahead, no more PDF spelunking, just instant clarity.