AA 125 (3 to 91,225): A set of stocks from which multibaggers & IBC cases may emerge in the next 2 to 5 years

Thinking about the odd headline? Before we explain it, let us introduce this report, the opening installment of a research-based analytical series that will, every Sunday, take you on a deep dive into auto ancillary companies that are well prepared to handle the EV transformation, or are preparing to do so. Also, the ones that are likely to go under as they are just not relevant in the EV age. Back to the headline: AA stands for auto ancillary, 125 is the number of listed auto ancillary companies, 3 to 91,225 stands for Rs. 3 crore to Rs. 91, 225 crore (the smallest to biggest market cap in the industry). Now, why the AA sector may throw up both multibaggers and insolvency cases is simple. The whole auto industry is going through a fundamental shift. A shift which will make several components irrelevant and hence is an existential threat for some companies. But those who anticipated the transition will benefit exponentially. And this transformation will get leg up when Tesla comes to India not only as a seller of its car (which will happen sooner than later) but when it sets up its plant and a new auto ancillary ecosystem gets built.