Easing commodity prices, supply snags to lift auto ancillary stks: Analysts

Thus far in 2022, key raw materials used in automobile manufacturing like steel, iron ore, aluminum, nickel, and rubber have dropped in the range of 16 per cent to 45 per cent.

A turnaround in the margin pressure, faced by auto ancillary companies, may begin by the second half of fiscal year 2022-23 (H2FY23), analysts said, as they expect the industry to reap the benefit of softening commodity prices, and easing supply snags with a lag. However, higher inventory costs may continue to dent the financials in the near-term.

"Despite minor relief in margins due to cool off in commodity prices, we expect margins to remain subdued in the July to September quarter of the current fiscal (Q2FY23) due to higher inventory costs. We expect profitability to be visible from Q4FY23 onwards,"