New Delhi, May 21 -- Auto ancillary stocks, once favoured for their promising structural tailwinds, have now entered a phase of valuation correction and performance reassessment. According to Ambit, while the auto ancillary (Anc) sector offers multiple growth levers, it continues to lag original equipment manufacturers (OEMs) on key financial metrics such as cash flow generation and return on capital employed (RoCE).

In its latest report, Ambit noted that auto ancillaries are benefitting from a broad set of growth drivers including rising content per vehicle, international expansion, premiumization, and India's cost advantage. The sector is also witnessing structural tailwinds from evolving emission and safety regulations, increased loca...