The auto and auto component sectors have had a rough 2-3 years, and not just related to Covid. But different factors point to a clear revival in this space. More, the auto sector is undergoing a transformation in design and technology. Our PrimeInvestor Auto++ smallcase is built on two pillars:

• Revival: Key segments of commercial vehicles and passenger vehicles are picking up. Continued demand from the logistics sector, opening up of the economy and growth, Govt spending on infrastructure, and the government PLI scheme can keep up the impetus. Prices of inputs such as steel and other commodities may cool off, helping reduce margin pressures.
• Transformation: EV adoption is leading to software defined architecture in future vehicles with more advanced driver assisted systems (ADAS). Automotive plants are going for higher levels of automation. Even auto ancillaries are increasing the level of automation they adopt. Companies aiding this growth and transformation are a differentiated play on the auto sector. 

This is an opportunity to get in at the start of the upswing at reasonable valuations.

The PrimeInvestor Auto++ portfolio splits into 3 segments:

• Auto ancillaries catering to both domestic and global markets, that piggyback on the auto sector growth
• Auto OEMs across auto segments, to play the revival in demand
• Technology companies that provide the auto sector with the technology to take it to the next level of growth and transformation