Key growth drivers include EV transition (biggest structural change), rising income levels and urbanization, infrastructure development, government support through FAME II scheme, export growth, and changing consumer preferences towards SUVs and premium vehicles. Cyclical factors like economic growth and interest rates also play important roles.

Evaluate companies based on market position and competitive advantages, EV strategy and execution, financial health and debt levels, growth prospects and margins, management quality and execution track record, and ESG practices and sustainability focus. Consider both fundamental analysis and technical analysis for better decision making.

Key risks include EV transition challenges and high capital requirements, cyclical nature and economic sensitivity, regulatory changes and compliance costs, competition and market share loss, supply chain disruptions and raw material costs, and technology disruption and obsolescence. Diversification and risk management are crucial.

Use multiple valuation methods: P/E ratios (10-20x range), P/B ratios (1.5-4x range), EV/EBITDA (5-15x range), and DCF analysis considering growth prospects. Consider sector-specific metrics like EV penetration, market share, and export growth. Focus on companies with strong fundamentals and growth prospects.

For growth investors, allocate 8-12% of equity portfolio to auto sector. For balanced investors, 6-10% allocation is appropriate. For conservative investors, 4-6% allocation is sufficient. Diversify across 2-3 quality auto companies to reduce concentration risk. Consider your risk tolerance and investment horizon while deciding allocation.