New Delhi, Sept. 5 -- India's auto-component sector could see continued earnings momentum as improving profit growth and a better consensus earnings outlook provide support to the industry, even as valuations have moved above their long-term averages, Jefferies said in a report.

The brokerage said auto-component companies outperformed original equipment manufacturers (OEMs) on operating profit growth in the June quarter, despite slower revenue growth. The improvement in profitability, along with an expanding business footprint, could remain an important driver for the sector going forward.

An analysis of 20 leading Indian auto-component companies by the brokerage showed aggregate revenue growth of 21 per cent year-on-year in the June qu...