Top 10 Stocks in the Indian Automotive Sector: Industry Analysis and Growth Prospects Driving the Auto Stocks

 

Indian Automotive Sector

India has one of the biggest automobile industries in the world, and it is vital to both the financial and industrial growth of this country. Companies in the auto industry are driving innovation and expansion, making auto stocks a crucial investment area for anyone hoping to profit from the growing market. The top auto stocks are those that have continuously shown excellent financial results and the flexibility to adjust to shifting market conditions. Additionally, companies' increasing interest in investigating rural markets contributed to the sector's expansion. The need for commercial vehicles is increasing as a result of the growing passenger and logistical sectors.

 

The Economic Impact of India’s Automobile Industry

The Indian auto industry is expected to account for 7.1% of the country's GDP by 2024. Furthermore, the industry contributes roughly 49% of the nation's manufacturing GDP. This significant contribution highlights the industry's vital role in promoting technical innovation, job creation, and economic growth nationwide. India has been a major force in the global automotive scene and is currently the fourth-largest automobile producer in the world.

 

Growth Prospects Driving Top Auto Stocks in India

1. Growing demand and growing Indian automobile production

Rising income levels, greater urbanization, and advantageous government policies have all contributed significantly to the industry's role in economic growth. The sector's expansion was also facilitated by businesses' increasing interest in the rural markets. The need for commercial vehicles is increasing due to the growing passenger and cargo transportation sectors. It is projected that emerging trends, such as the electrification of vehicles, especially three-wheelers and small passenger cars, will drive future market expansion. In January 2024, a total of 23,28,329 passenger cars, three-wheelers, motorcycles, and quadricycles were produced. Due to India's growing middle class and increased disposable incomes, there is a greater demand for cars, which is driving this remarkable manufacturing figure.

 

2. Growing investment and developing technology boost India's automobile industry

Technology has played a pivotal part in the amazing evolution of India's automobile sector. The growing population, increasing disposable income, easy access to credit and financing for car purchases, and encouraging government policies are the primary drivers of the Indian automotive market. Over the course of the projected period, rising foreign direct investment in the Indian automotive sector is anticipated to propel market expansion. For example, between April 2000 and September 2023, the Indian automobile industry received a total equity FDI inflow of around USD 35.40 billion.

 

Expansion of the India automotive Market

The India automotive market size was valued at USD 108.5 Billion in 2022 and is projected to USD 232.1 Billion by 2032, exhibiting a CAGR of 7.9% during the forecast period 2022-2032. The top stocks in the Indian automotive sector include Tata Motors Ltd, Mahindra & Mahindra Ltd, Maruti Suzuki India Ltd, Bajaj Auto Ltd, Samvardhana Motherson International Ltd, TVS Motor Company Ltd, MRF Ltd, Bosch Ltd, Ashok Leyland, and Hyundai Motor.

 

Government Initiatives Boosting India’s Auto Sector Growth

• According to Ministry of Heavy Industries (MHI) officials, India intends to introduce a new program to encourage the purchase of electric vehicles and upgrade charging infrastructure, in line with the interim budget's emphasis on environmentally friendly transportation. Additionally, by March 31, 2024, the US$ 321.5 million (Rs. 2,671.33 crore) allotted for 2024–25 is anticipated to be used.

 

• India is a major auto exporter as well, and its export growth is expected to be robust in the near future. Furthermore, it is anticipated that by 2022, India will rank among the world's top two-wheeler and four-wheeler markets due to a number of government measures, including the Automotive Mission Plan 2026, the scrappage policy, and the production-linked incentive program.

 

• In February 2022, as part of the government's strategy to boost domestic auto manufacturing and draw in new investment, 20 automakers including Tata Motors Ltd., Suzuki Motor Gujarat, Mahindra & Mahindra, Hyundai, and Kia India Pvt. Ltd. were selected to receive production-linked incentives (PLI). The combined proposed investment from the 20 automakers is around USD 5.95 billion (Rs. 45,000 crore).

 

List of Key Stocks in the Indian Automotive Sector

1. Tata Motors Ltd.
2. Maruti Suzuki India Ltd.
3. Mahindra & Mahindra Ltd.
4. Eicher Group
5. Ashok Leyland Ltd
6. Bajaj Group
7. TVS Motor Company Ltd.
8. MRF Ltd
9. Balkrishna Industries Limited
10. Samvardhana Motherson International Ltd

 

Top 10 Stocks in the Indian Automotive Sector

• Leading Auto Stocks in Car Manufacturing Companies in India

Tata Motors Ltd.

Headquarters: Mumbai, Maharashtra.

In 1945, Tata Motors was founded with the intention of manufacturing locomotives. The business established a Daimler-Benz production plant and formed a joint venture with the corporation in 1954. One of the top automakers in the world now is Tata Motors. The business is a member of the Tata Group, a renowned international conglomerate. It provides a wide range of autos, such as trucks, buses, sports utility cars, and defense-related vehicles. With a robust global network of subsidiaries, associate firms, and partnerships (JVs), it operates in India, the United Kingdom, Korea, the African continent, China, Brazil, Austria, and Slovakia. Tata Daewoo in South Korea and Jaguar Land Rover in the UK are two of its subsidiaries. Additionally, the total revenue from operations, comprising finance revenues, rose from Rs 3.4 trillion (tn) in FY23 to Rs 4.3 trillion (tn) in FY24, a 26.6% rise. The improved mix and higher vehicle volumes were the primary causes of this rise. In FY24, the net profit was Rs 313.9 billion, while in FY23, it was Rs 24.1 billion. Higher volumes, improved mix, improved cost control, and a decline in commodity prices all contributed to the increased profitability.

 

Maruti Suzuki India Ltd.

 

Headquarters: Vasant Kunj, Delhi.

The Indian government founded Maruti Suzuki in 1981 as a joint venture with Suzuki Motor Corporation (SMC) of Japan. At the time, it was known as Maruti Udyog Ltd. At first, Suzuki owned 26% of the company. In 2007, the Indian government sold its share to Suzuki Motor Corporation after reducing its own. In India, it dominates the market for passenger cars. The business is currently SMC's largest subsidiary in terms of sales and manufacturing output. About 42% of all passenger cars sold in India are sold by Maruti Suzuki Ltd., the industry leader in this segment. The corporate office of the organization is situated in New Delhi. Additionally, the company is making investments in an Indian battery manufacturing facility, with the possibility of production beginning in CY26.  The company's net sales for the first quarter of FY25 were Rs 338,753 million, compared to Rs 308,452 million for the first quarter of FY24. The quarter's net profit increased 46.9% to Rs 36,499 m from Rs 24,851 m in the first quarter of FY24. This was mostly due to attempts to cut costs, favorable commodity prices, and gains in foreign exchange.  Additionally, there were some slight advantages to commodities and FX in Q1 FY25, but these were somewhat countered by higher discounts.  For the upcoming year, the company wants to reach the 300,000-unit export milestone.

 

• Leading Auto Stocks in Commercial Vehicle Manufacturing Companies in India

Mahindra & Mahindra Ltd.

 

Headquarters: Apollo Bunder, Mumbai, Maharashtra.

Ghulam Mohammad and two Mahindra brothers, KC and JC Mahindra, founded the business in 1945 as a steel trading firm. In 1948, it changed its name to Mahindra & Mahindra. With operations in the 2-wheeler, 3-wheeler, PV, CV, tractor, and earthmoving industries, Mahindra & Mahindra Ltd. is currently one of India's most diverse automakers. The biggest tractor manufacturer in the world is Mahindra Tractors, a division of M&M. Mumbai is home to the company's main office. Additionally, the company sold 824,939 cars in FY24. Compared to the prior year, this represented an 18.1% increase. Including exports and domestic sales of Mahindra, Swaraj, and Trakstar brands, it sold 378,386 tractors. Compared to the prior year, this was a 7.2% decline in growth. This is the company's highest-ever total sales of cars and tractors in a single year.  According to reports, Mahindra is in advanced negotiations to purchase a 50% share in Skoda Auto Volkswagen India; the deal might be worth up to 1 billion USD.

 

Eicher Group

Headquarters: New Delhi, India.

The listed company of the Eicher Group in India is Eicher Motors Limited, which was established in 1982. It leads the world in middleweight bikes and plays a significant role in the Indian car sector. It is the owner of the well-known Royal Enfield brand, which specializes in mid-sized (250–750 cc) motorcycles. The company's Royal Enfield brand includes the Classic, Bullet, and Himalayan brands. More than 60 nations sell the cars that Eicher Motors manufactures. The business formed Volvo Eicher Commercial Vehicles Limited (VECV) as a joint venture with the Volvo Group. VECV operates trucks and buses, sells auto parts, and provides technical consulting services. The corporate office of the organization is situated in New Delhi. Additionally, in the second quarter of 2024, Eicher Motors reported a standalone net profit of Rs 1010 crore. A total of Rs 4,205 crore was earned. 2.25 lakh motorcycles were sold by Royal Enfield. The business introduced two Flying Flea electric motorcycle versions. Q2 performance for the commercial vehicle arm, VECV, was the best it has ever been.

 

Ashok Leyland Ltd

Headquarters: Chennai, India.

Commercial vehicle manufacturing and sales are Ashok Leyland Ltd.’s current business activities. Forgings and castings for engines for industrial and marine applications are produced by the company. Its goods include special vehicles, buses, trucks, engines, and defense. Ashok Leyland offers a variety of goods, ranging from diesel-powered engines for commercial marine and generator applications to 18 to 82-seater double-decker buses, 7.5 to 49-ton haul automobiles, and several special-purpose vehicles. The Hinduja Group’s flagship company is this one. Additionally, excellent financial performance was recorded by Ashok Leyland in FY 2023–2024. With a sale of Rupees 45,931 crore and an operating profit of Rupees 7,943 crore, the company made Rupees 2,696 crore in net profit, with an EPS of Rupees 8. As of November 29, 2024, Ashok Leyland’s share price is Rupees 232.08, and its market capitalization is Rupees 68,149 crore. With a PE ratio of 26.40 and a PB ratio of 6.61, the company is well-regarded by the market and has a promising future growth forecast.

 

• Leading Auto Stocks in Two-Wheeler Manufacturing Companies in India

Bajaj Group

Headquarters: Mumbai, Maharashtra.

The Bajaj Group's primary business, Bajaj Auto, was first founded in 1945 as Bachraj Trading Corporation Ltd. When the business first started out, it imported and sold two- and three-wheelers in India. The business was granted a license by Piaggio to produce Vespa scooters in 1959. The company ships its goods to 79 countries worldwide. Pune is home to the organization's headquarters. Additionally, the company also benefits from Bajaj's entry into the quickly growing electric rickshaw (eRick) market. There is a significant chance for Bajaj to expand in this industry since the eRick market is almost twice as large as the 3W market in terms of value.  In contrast, Bajaj Auto declared a net profit of Rs 19.8 billion on an annual basis (YoY). The corporation saw a 19.4% increase in net profit. To reach Rs 24.16 billion, the earnings before interest, tax, depreciation, and amortization (EBITDA) climbed by 24% year over year.

 

TVS Motor Company Ltd.

Headquarters: Chennai, India.

T.V. Sundaram Iyengar founded a transportation company in Madurai in 1911, marking the beginning of TVS. Today, a variety of two-wheelers and three-wheelers are produced by TVS Motor Company Ltd (TVSM), which is involved in the production of two-wheelers and their accessories. One of the top companies in the two-wheeler sector, TVSM serves both domestic and foreign markets by being the only one with a presence in all three categories: motorcycles, scooters, and mopeds. Chennai is home to the company's main office. Additionally, in order to meet the increasing demand, TVS has been aggressive in the electric two-wheeler (E2W) industry, introducing new models.  Due in significant part to its decreased dependence on the African market, TVS has spearheaded the export rebound thus far in 2024.  Revenue from activities increased by 20% in FY24 to Rs 317.7 billion from Rs 263.7 billion in FY23.  The year-over-year operating EBITDA increased to 11.1%. In FY24, net profit was Rs 20.8 billion, up from Rs 14.9 billion in FY23.

 

• Leading Auto Stocks in Tyre Manufacturing Companies in India

MRF Ltd

Headquarters: Chennai, India.

MRF Tyres is the biggest tyre maker in India and a worldwide corporation based in India. Chennai is where it has its headquarters.In [2] When the company was first founded, it was known as Madras Rubber Factory, hence the name MRF. Tires, treads, tubes, conveyor belts, paints, and toys are among the rubber goods produced by the company. Additionally, MRF Ltd.'s market capitalization is Rs. 56,941.90 crores. The stock’s monthly return is -1.17%. It has a 22.73% one-year return. The 52-week high of the stock is 12.80% away.  Based in India, MRF Limited is a holding company that specializes in the production and distribution of tires, tubes, flaps, tread rubber, and rubber and rubber chemicals. Furthermore, the company's global operations encompass a broad range of tire categories, such as light trucks, passenger vehicles, motorsports, heavy-duty truck/bus tires, and more.

 

Balkrishna Industries Limited

Headquarters: Lower Parel, Mumbai

Balkrishna Industries Limited (BKT) has led the way for over three decades in the development and production of safe, cutting-edge, and highly effective tires for a range of sectors, including ports, mining, construction, agriculture, and earthmoving.  The business also produces carbon black and tubes. Industrial, agricultural, and off-road tires are among its primary offerings. Agro trucks, telehandlers, harvesters, tractors, and other equipment all use the company's agricultural tires. Forklifts, excavators, container handlers, compactors, and mobile cranes are just a few of the devices that use its industrial tires. Furthermore, scrapers, modular dump trucks, stiff dump trucks, underground mining equipment, etc. all employ BKT's off-road tires. Additionally, BKT caters to the aftermarket market as well as manufacturers of original equipment (OEMs).  BKT distributes items through independent distributors and ships them all over the world. It has four manufacturing facilities in Maharashtra, Rajasthan, and Gujarat. Additionally, BKT has distribution partners in more than 160 nations on five continents, which enables it to cater to a genuinely international clientele. Additionally, for the first half of FY 2025, BKT recorded a substantial increase in earnings, demonstrating notable year-over-year growth in sales volume, revenue, and profitability. Furthermore, in Maharashtra, BKT opened a new plant for manufacturing with a yearly capacity of over 30,000 MT of off-highway tires, investing USD 56 million.

 

• Leading Auto Stocks in Auto Component Manufacturing Companies in India

Samvardhana Motherson International Ltd

Headquarters: Mumbai, Maharashtra.

The company Samvardhana Motherson International Ltd. was founded in 1986 to provide wiring harnesses for Maruti Udyog. With the Japanese Sumitomo Group, the business was a joint venture. Manufacturing and selling parts to automakers is the company's main business. The company maintains a dominant market share, is a major global player in polymer-based interior and exterior modules, and is one of the biggest producers of external rearview mirrors worldwide. However, the firm is also India's biggest producer of passenger car wire harnesses. The company's main office is in Noida. Additionally, Samvardhana Motherson International Ltd. declared a profit of Rs 642.01 crore on a total income of Rs 3,107.01 crore for the most recent quarter, which concluded in 2024. Despite earning Rs 28,255.33 crore in total revenue, Samvardhana Motherson International Ltd reported a profit of Rs 948.81 crore for the year that ended in September 2024.

 

Conclusion

It is important to understand the hazards involved, even though the possible gains from car stocks can be alluring. Sales in the cyclical automotive sector frequently change in tandem with the state of the economy. Automobile stock share prices may be impacted by a decline in vehicle demand during downturns.  Additionally, firms' expenses and profitability may be impacted by legislative changes, such as more stringent environmental standards.  Additionally, there is fierce competition in the sector, with many well-established businesses continuously coming up with new ideas and competing.  In addition to the pressure this fierce competition can put on profit margins, it can be difficult for businesses to sustain steady growth and profitability.  Furthermore, supply chain interruptions like as component shortages or natural disasters can impair output and have an impact on stock prices. 

 

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