Shares of key auto ancillary stocks such as Sona BLW Ltd, Bharat Forge Ltd, and Samvardhana Motherson Ltd surged up to eight percent in trade during the early session on February 4, as US President Donald Trump decided to hit the pause button on tariffs on Canada and Mexico.
Elara Securities noted that India exports auto components worth $656 million to Mexico, making up 3 percent of the total $21.2 billion in exports. The brokerage mentioned that these are mostly metallurgical parts like forgings and castings.
For Samvardhana Motherson, Mexico accounts for nearly 4 percent of its revenue. Elara highlighted potential volatility, as OEMs may shift production to avoid higher vehicle prices in the US due to tariffs.
Sona BLW gets about 2 percent of its revenue from Mexico, which mainly serves as an assembly hub. Since most value addition happens in India, production could shift to US facilities if OEMs relocate.
The stocks erased all losses recorded during the previous trading session. At 9.55 am, shares of Samvardhana Motherson were trading at Rs 139.98, up 7.2 percent, while Sona BLW was up 6.9 percent at Rs 519. Bharat Forge's stock price gained 3.6 percent to Rs 1,180.
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Late Monday night, US President Donald Trump announced a 30-day delay on proposed tariffs for Canadian and Mexican imports after holding discussions with leaders of both nations. The postponement follows commitments from Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum to strengthen border security with the US. Despite the delay, analysts at Nomura believe the the likelihood of tariffs on Mexico and Canada is higher than it was previously.
Over the weekend, the Trump administration levied a 25 percent import tariff on all Mexican imports and most Canadian goods, with a 10 percent exemption for energy products. Meanwhile, a 10 percent tariff on Chinese goods remains under review.
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