Market players continue to remain upbeat on the auto industry's fortunes and feel there is still room for valuation gains.
Driving the sentiment is the fact that the global auto manufacturers are only beginning to outsource their requirements for spares to Indian suppliers.
Also, the current liquidity in the stock markets is expected to drive these shares on the back of impressive earnings.
Global auto makers such as Ford, General Motors, DaimlerChrysler and Volkswagen have opened international procurement offices in India.
At current levels of enquiry, this alone could translate into a $1.5 billion market potential for India, according to a Refco Research report.
The primary reason for this is the downturn in Europe and the United States, where the production costs are also very high.
This, in turn, is forcing many global companies to look at low-cost manufacturing centres in India and China.
Further, the export boom is expected to continue despite the Indian rupee currently being overvalued in real terms than it was a decade ago.
"Manufacturing costs for Indian component manufacturers is on an average 20 to 30 per cent cheaper than in their American counterparts," said Priya Madani, analyst, Anagram Stockbroking.
Already, the Auto Component Manufacturers Association has revised the export target of auto components from $2.7 billion to $12 billion by 2010.
Anticipating these changes, select auto-component stocks have been on the fast track in the last few months. Amtek Auto has surged from Rs 194.90 on July 1 to Rs 211.50 on August 4.
Similarly TVS Autolec Ind has gained 34.71 per cent from Rs 101.40 to Rs 136.60. IP Rings has edged up from Rs 57.90 to Rs 78.80, a change of more than 36 per cent.
Samkrg Pistons is up 39.94 per cent from Rs 39.30 to Rs 55. Talbros Auto is up 48.32 per cent from Rs 38.80 to Rs 57.55.
Hi-Tech Gears moved up from Rs 128.80 to Rs 161.05 and Automotive Axle is up 20.44 per cent from Rs 132.80 to Rs 159.95.
Automobile Corp was up more than 100 per cent from Rs 29.50 on July 1 to Rs 64.10 on August 4. Motherson Sumi is up from Rs 161 to Rs 198.10, Sundaram Clayton is up from Rs 318.85 to Rs 345.05 and India Nippon El is up 22.35 per cent from Rs 237.05 to Rs 290.05.
But most analysts believe that the historic growth rate of 35 per cent in the two-wheeler industry and 18 per cent in the four/six wheeler industry seen last year may not hold in the current year.
"There is every reason to believe that replacement demand, infrastructure projects and economic growth would translate into a healthy growth rate of 18-22 per cent for the secotor, Refco said in a recent report.
Positive trend