Recently there was news of rare elements like lithium found first in Jammu and Kashmir and then in Rajasthan. This created huge waves in the electric vehicle sectors across the globe as lithium is a key component in the manufacture of lithium ion batteries used in electric vehicles. In the last few years, there has been a constant rise in demand for electric vehicles in the country. With the government actively working towards creating a robust ecosystem for manufacturing of electric vehicles in the country, experts see a bullish sentiment for EV stocks. Let’s take a look at the top stocks in this industry and other crucial details that can help investors looking to invest in this sector.
Read More: Benefits of owning an Electrical Vehicle (EV)
Top EV stocks in India in terms of market capitalisation
Some of the top EV stocks in the country and their related details are mentioned below.
Tata Motors
Tata Motors Group is a renowned global automobile manufacturer and an integral part of the prestigious multinational conglomerate, the Tata Group. The company has a prominent global presence in countries like the UK, South Korea, South Africa, China, Brazil, Austria, and Slovakia and offers a wide range of vehicles. Tata Motors has also increased its market share in the electric vehicle segment in India over the past few years becoming the top EV brand in the country in the 4-wheeler segment.
The key details of this company are mentioned below.
| Category | Details |
| Market Capitalization | Rs. 1,86,900 crores |
| PE Ratio | 76.99 |
| Return on Equity | 6.58% |
| Debt Equity Ratio | 1.96% |
| Promotor’s Holdings | 46.39% |
| Share price | Rs. 560.10 |
| Dividend Yield | 0.36% |
The trailing returns of Tata Motors are tabled below
| Period | Trailing Returns |
| 1 year | 28.57% |
| 3 years | 69.29% |
| 5 years | 12.56% |
| 10 years | 6.49% |
Mahindra & Mahindra
This company is another big name in the auto sector in the country as well as a global force. Mahindra & Mahindra, founded in 1945, has a presence in many auto segments like 2-wheelers, 3-wheelers, PVs, CVs, tractors & earthmovers. The company has many business segments like retail, steel processing, consulting services, hospitality, infrastructure, aerospace and more.
The key details of this company are mentioned below.
| Category | Details |
| Market Capitalization | Rs. 1,70,363 crores |
| PE Ratio | 16.70 |
| Return on Equity | 15.62% |
| Debt Equity Ratio | 0.05% |
| Promotor’s Holdings | 19.32% |
| Share price | Rs. 1,373.60 |
| Dividend Yield | 1.18% |
The trailing returns of Mahindra & Mahindra are tabled below
| Period | Trailing Returns |
| 1 year | 31.44% |
| 3 years | 42.89% |
| 5 years | 8.54% |
| 10 years | 11.01% |
TVS Motors
This company was formed in 1992 and is based in Chennai India. TVS Motors provides a wide range of two-wheelers and three-wheelers and is now a leading name in the electric two-wheeler segment in India. The company is engaged in the manufacture of two-wheelers and their accessories as well and has a strong global presence in the Middle East, Africa, Southeast Asia, Latin, and Central America.
The key details of this company are mentioned below.
| Category | Details |
| Market Capitalization | Rs. 63,771 crores |
| PE Ratio | 47.39 |
| Return on Equity | 25.54% |
| Debt Equity Ratio | 1.65% |
| Promotor’s Holdings | 50.27% |
| Share price | Rs. 1,340.10 |
| Dividend Yield | 0.38% |
The trailing returns of TVS Motors are tabled below
| Period | Trailing Returns |
| 1 year | 78.43% |
| 3 years | 56.04% |
| 5 years | 18.12% |
| 10 years | 43.86% |
Power Grid Corporation of India Limited
This is a PSU that has the status of a Maharatna with the government holding a 51.34% stake in the company. It is the largest electric power transmission company in India. This company transports substantial quantities of electricity from central power generating facilities and regions with excess power to high-demand areas within and between different regions. The main activities of Power Grid Corporation of India revolve around the strategic planning, execution, operation, and maintenance of the Inter-State Transmission System (ISTS), as well as providing telecommunication and consulting services.
The key details of this company are mentioned below.
| Category | Details |
| Market Capitalization | Rs. 1,70,724 crores |
| PE Ratio | 11.11 |
| Return on Equity | 18.46% |
| Debt Equity Ratio | 1.37% |
| Promotor’s Holdings | 51.34% |
| Share price | Rs. 244.90 |
| Dividend Yield | 6.11% |
The trailing returns of Power Grid Corporation of India are tabled below
| Period | Trailing Returns |
| 1 year | 9.06% |
| 3 years | 23.74% |
| 5 years | 10.53% |
| 10 years | 11.43% |
Hero MotoCorp
Hero MotoCorp, formerly known as “Hero Honda,” holds the distinction of being one of India’s pioneering motorcycle manufacturers. The company’s origins trace back to 1984 when it entered into a technological partnership with Honda, Japan. Prior to this collaboration, Hero had established itself as a prominent bicycle brand under the name Hero Cycles. In 2011, the Honda group divested its 26% ownership in the company to the Munjals, who are the promoters, resulting in the termination of the joint venture. Following the conclusion of this partnership, the company underwent a name change and became known as Hero MotoCorp. The company is one of the leading names in the electric two-wheeler segment with a market share of approximately 15.75%.
The key details of this company are mentioned below.
| Category | Details |
| Market Capitalization | Rs. 57,940 crores |
| PE Ratio | 21.09 |
| Return on Equity | 16.91% |
| Debt Equity Ratio | 0.00% |
| Promotor’s Holdings | 34.77% |
| Share price | Rs. 2,899.30 |
| Dividend Yield | 3.37% |
The trailing returns of Hero MotoCorp are tabled below
| Period | Trailing Returns |
| 1 year | 12.12% |
| 3 years | 6.74% |
| 5 years | -4.42% |
| 10 years | 5.82% |
Top reasons to invest in EV stocks
EV stocks have been gaining importance in the investment portfolio over the past few years. The growing demand for electric vehicles in India and the infrastructure to support this demand is one of the many factors that has increased the market price of many stocks in this segment. Some of the key factors or reasons to make EV stocks part of the investment portfolio are highlighted hereunder.
Increasing consumer demand
As environmental awareness and concerns about air pollution grows, consumers in India are actively seeking greener transportation alternatives. The demand for electric vehicles is expected to surge in the coming years as more consumers prioritize sustainability and zero-emission transportation. By investing in EV stocks, investors can tap into this increasing consumer demand and potentially benefit from the rising sales and market share of EV companies.
Growing market potential
The global and Indian markets present a significant opportunity for investing in electric vehicle (EV) stocks. As governments worldwide aim to reduce pollution and dependence on fossil fuels, India has set ambitious goals for electrifying its auto sector. This shift towards sustainable transportation creates a favorable market environment for EV manufacturers and related companies. With a growing population and increasing urbanization, the demand for EVs is expected to rise steadily, providing long-term growth prospects for investors.
Government support
The Indian government has introduced several policies and incentives to promote the adoption of electric vehicles. These include subsidies, tax benefits, and initiatives to develop charging infrastructure across the country. Such support from the government provides a conducive environment for EV companies to thrive. Investors can benefit from these policies, as they contribute to the growth and profitability of the EV industry in India.
Technical advancements
Electric vehicles are experiencing rapid technological advancements. Significant progress has been made in battery technology, resulting in improved energy storage, longer driving ranges, and faster charging times. Additionally, charging infrastructure is expanding, making electric vehicles more convenient for consumers. By investing in EV stocks, investors can gain exposure to companies at the forefront of these technological advancements. These companies have the potential to capture a significant market share and generate higher returns on investment as the EV industry evolves.
Part of the global shift
The transformation of the global automotive industry towards electric mobility is a significant trend that investors can leverage. By investing in EV stocks, investors can participate in this global shift and gain exposure to international markets. This exposure provides the potential for long-term growth as the adoption of electric vehicles expands worldwide.
What are the factors to consider while investing in EV stocks?
Some of the key factors to be considered while investing in EV stocks are mentioned below.
Company fundamentals
When assessing the fundamentals of an EV company, investors should consider factors such as its financial statements (e.g., revenue, profit, and cash flow), market share, competitive advantage (such as proprietary technology or strong brand recognition), product quality, and customer base. Strong fundamentals indicate that the company is well-positioned to generate revenue, sustain profitability, and compete effectively in the market.
Reviewing the company portfolio
Another key factor is to evaluate the company’s portfolio of electric vehicle models. Investors should look at factors such as the popularity of their current models, customer demand for their products, technological advancements incorporated in their vehicles, and the potential for future product launches. A diverse and appealing portfolio suggests that the company can cater to different customer preferences and adapt to evolving market trends which is ultimately better for the bottom line of the company.
Government initiatives
Investors should stay informed about government policies and initiatives supporting the electric vehicle industry. The Government of India has offered many subsidies, tax incentives, grants, and other measures to encourage the adoption of electric vehicles in the country. These initiatives can stimulate demand, improve infrastructure (such as charging stations), and create a favorable regulatory environment. Government support can significantly impact the growth prospects of EV companies, making them more attractive for investment.
Management team
Another crucial factor is evaluating the competence and experience of the company’s management team. Investors should look for a leadership team with a successful track record in the automotive or related industries and assess their ability to execute strategic plans, drive innovation, make effective business decisions, and navigate challenges. A capable management team is instrumental in steering the company towards growth and profitability.
Financial stability and debt levels
There are many startups and small to medium-sized companies as well in the electric vehicle segment. Therefore, it is essential to examine the company’s financial stability by analyzing its financial statements and debt levels. Consistent revenue growth, healthy profit margins, and strong cash flow generation are indicators of financial stability. Additionally, it is also important to assess the company’s debt levels to ensure that they are manageable as companies with solid financial positions are better equipped to weather economic downturns and invest in future growth opportunities.
Valuation and stock price
Valuation of the EV stocks is also an important parameter that involves assessing the stock’s price to determine if it is undervalued or overvalued. A commonly used valuation metric is the price-to-earnings (P/E) ratio, which compares the stock price to the company’s earnings per share. An overvalued stock may have limited upside potential, while an undervalued stock may present a buying opportunity. It’s important to balance the stock’s valuation with other qualitative and quantitative factors.
Risk management
Risk evaluation is a key component while investing in EV stocks. These risks can include market volatility, changes in government regulations, intense competition, technological disruptions, and supply chain challenges. It is imperative to review how the company manages and mitigates these risks. Companies with effective risk management strategies are better positioned to adapt to market changes and minimize potential negative impacts.
Long-term investment perspective
Investors should ideally take a long-term view when considering investing in EV stocks. It is important to look beyond short-term market fluctuations and consider the company’s long-term growth potential. The growth potential of the EV industry as a whole and the continuously adapting technology are ideal characteristics of stocks to be held for the long term. Investing with a long-term perspective allows the investors to benefit from the potential value creation and industry trends over time.
Conclusion
Electric vehicles are part of the sunrise sectors in the economy that are seeing growing consumer demand as well as government support. This is also a result of the changing geographical dynamics and consumer preferences that are viewing electric vehicles in a better light than just a few years back. It is important for investors to conduct thorough research and seek advice from financial advisors if necessary.
FAQs
The various segments in the EV sector include auto manufacturers, battery manufacturers, auto parts and EV software manufacturers, and charging station networks.
There are essentially four variants or types of electric vehicles available in the EV sector namely, the Battery-Powered Electric Vehicle (BEV), the Hybrid Electric Vehicle (HEV), the Plug-In Hybrid Electric Vehicle (PHEV), and the Fuel Cell Electric Vehicle(FCEV).
The most popular segment of EVs in India is the two-wheeler and three-wheeler segment.
The estimated growth rate of the electric vehicle industry is estimated to be approximately 90% CAGR.
