A few auto ancillary stocks saw a rebound in share prices on February 4th (Tuesday), recovering the losses from Monday’s session. On Monday, the stocks had dropped by over 8 percent due to the news of US President Donald Trump’s decision to impose a 25 percent tariff on goods from Canada and Mexico, announced on February 1st.
However, the tariffs, initially set to take effect at 12:01 AM US time on Tuesday, were later reversed that same day. Both Mexico and Canada were granted a one-month delay before the tariffs were reintroduced.
The brokerage firm Elara Securities highlighted in a note that India’s auto component exports to Mexico make up 3 percent of the total $21.2 billion in exports, which equals around $656 million. According to their industry insights, these exports likely consist mainly of metallurgical components such as forgings and castings.
For companies like General Motors, Toyota, and Volkswagen, vehicles manufactured in Mexico contribute significantly to US sales. Around 30-40 percent of vehicles sold by General Motors and Toyota, and around 60 percent of those sold by Volkswagen in the US, are produced in Mexico and Canada.
Elara also highlighted that while the impact of tariffs on China requires further evaluation, it could lead to higher component prices from China to the US. This might push US companies to explore alternative sourcing options, with India potentially emerging as a viable alternative, especially since China has one of the largest diecasting component capacities.
Following are the three auto-ancillary stocks that saw gains in share prices after Trump paused the Mexico tariffs:
1. Samvardhana Motherson International Limited
With a market cap of Rs. 97,133 crores, the shares of one of the world’s leading specialised automotive component manufacturing companies for OEMs surged nearly 9 percent to hit an intraday high at Rs. 142.15 on Tuesday.
The brokerage firm Elara noted that Mexico accounts for about 4 percent of Samvardhana Motherson’s total revenue. However, the impact remains uncertain as it depends on how OEMs adjust their production bases to mitigate potential price hikes on US vehicles due to tariffs.
Incorporated in 1986, Samvardhana Motherson International limited, formerly known as Motherson Sumi Systems Limited, is engaged primarily in the manufacture and sale of components to automotive original equipment manufacturers (OEMs).
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2. Sona BLW Precision Forgings Limited
With a market cap of Rs. 31,140.5 crores, the shares of one of the leading global providers of mobility technology solutions surged nearly 8 percent to hit an intraday high at Rs. 524.7 on Tuesday.
Mexico makes up roughly 2 percent of the company’s revenue. While most of the product value addition occurs in India, Mexico primarily serves as an assembly hub. Elara mentioned that if OEMs move production to the US, Sona BLW could shift operations to supply directly to US facilities.
Incorporated in 1995, Sona BLW Precision Forgings Limited is engaged in the manufacturing of precision forged bevel gears and differential case assemblies, conventional and micro-hybrid starter motors, EV traction motors etc., for automotive and other applications.
3. Bharat Forge Limited
With a market cap of Rs. 55,919.6 crores, the stock surged nearly 5.2 percent to hit an intraday high at Rs. 1,198.9 on Tuesday.
Bharat Forge Limited is engaged in the manufacturing and selling of forged and machined components including aluminum castings for the auto and industrial sectors as well as assembled products for the defence industry.
Written by Shivani Singh
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