US Tariffs Impact on India: These Two Auto Stocks To Be Worst Hit, Says Brokerage - Do You Own?

Auto Stocks to Buy: The US's recent announcement to slap a 25 per cent tariff on passenger vehicle imports has sent shockwaves across the global automotive supply chain.

The tariffs, which are set to go into effect on April 3, 2025, will target not only finished automobiles but also automotive components such as engines, transmissions, powertrain parts, and electric systems.

This trend has raised concerns among Indian Original Equipment makers (OEMs) and component makers, many of whom rely on the US market for exports.

Margin Pressures for Indian Auto Players

According to a Brokerage, Monarch Networth Capital, the key concern for Indian automotive suppliers will be margin challenges, as growing vehicle costs are expected to hinder discussions with US automakers.

While Indian vendors have already been through rigorous product development cycles with US OEMs, repeating this process with alternative suppliers in the short term presents hurdles.

Nonetheless, the imposition of tariffs may still squeeze margins, particularly for companies that depend heavily on the US market.

Auto Stocks To Be Worst Hit

According to the Brokerage report, Sundram Fasteners is expected to incur the most impact of the tariffs among the Indian automotive ancillaries studied, owing to its significant exposure to the US market, which accounts for 22.4 per cent of its revenue in FY24. T

Sundram's forthcoming deliveries of EV gearbox sub-assemblies, totalling 40 billion and due to commence in Q1 FY26, are expected to face pressure.

Similarly, Happy Forgings, which has a 2.6 per cent US revenue exposure in 9MFY25, is likely to experience challenges in increasing production of brake flanges and e-axles for the US market.

Auto Stocks To Weather the Storm

SJS Enterprises and Fiem Industries, which have only 1.2 per cent and 0.5 per cent exposure to the US market, are projected to be the least affected by the new tariffs.

SJS, in particular, stands out as the best conviction pick among auto ancillary stocks, owing to its strong business model and growth prospects.

Notably, its product line, which includes vehicle aesthetic components, remains unaffected by the tariffs, allowing it to maintain its outstanding performance.

Auto Stocks to Watch

The brokerage has given key recommendations for auto stock to buy. Here's the full list:

SJS Enterprises: A strong option in the auto ancillary industry with a "Buy" recommendation and an excellent target price of Rs 1,400, which represents a 58 per cent potential upside.  

Pricol: The Brokerage has issued a "Buy" recommendation with a target price of Rs 570, which represents a 26 per cent upside potential based on current prices.  

Fiem Industries: Broking has issued a "Buy" call with a target price of Rs 2,000, implying a 40 per cent upside.  

Sundram Fasteners: The Brokerage has rated the stock as "Accumulate" with a target price of Rs 1,120, implying a 24 per cent potential despite tariff difficulties.  

Happy Forgings: Broking has assigned a "Buy" rating, with a target price of Rs 1,280 and a 63 per cent upside as a long-term investment.

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