Best Automobile Stocks in India

20 May 2024
10 min read
Best Automobile Stocks in India
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(The stocks mentioned in the blog are as per Analyst Ratings and Market Capitalization)

From cars and motorcycles to commercial vehicles, the Indian automotive industry offers a diverse range of vehicles.

India's automotive sector contributes approximately 50% of the manufacturing GDP, 26% of the industry GDP, and 7.1% of the overall GDP. The country’s automotive sector ranks 3rd globally and offers an evolving environment for investors.

Automobile Industry in India - A Brief Overview

India's automobile industry has grown significantly in recent years, making it one of the fastest-growing automotive markets worldwide. With a wide range of vehicles catering to different segments, India has become a centre for automobile manufacturing and exports. 

The automotive sector boasts numerous original equipment manufacturers and hundreds of auto component suppliers. Notably, India holds a prominent position in the global heavy vehicles market, ranking as the largest producer of tractors, the second-largest manufacturer of buses, and the third-largest producer of heavy trucks. 

Currently, India is witnessing a rise in the adoption of connected automotive technology, which integrates vehicles with internet connectivity. It enables features like remote diagnostics, real-time navigation, and vehicle-to-vehicle interaction. While fully automated vehicles are not yet on Indian roads, companies are conducting experiments with driverless vehicles, reflecting the growing interest in autonomous driving technology in the country. 

Additionally, several factors contribute to the growth of the Indian automotive market, including increasing urbanisation, a growing middle-class population, and a heightened focus on environmentally friendly mobility solutions. Moreover, the Government of India has played a pivotal role in fostering growth in the automobile sector. Initiatives like ‘Make in India’ and the ‘National Electric Mobility Mission Plan’ have stimulated investments, research & development, innovation and infrastructure enhancements for electric vehicles. 

According to a report, it is expected that the Indian Automotive Market size will exceed a CAGR of 8.1% from 2023 to 2030. Furthermore, by 2030, the market is expected to surpass USD 217.90 billion, reflecting the industry's resilience and potential for continued expansion.

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Best Automobile Stocks in India 2024 as per Analyst Ratings

The following table mentions the best auto stocks as per analyst ratings. We have picked analyst ratings provided by the I/B/E/S databases as a criterion to draft this list below, as these analysts run comprehensive research of the stock market before rating a stock-.

Here’s the list-

S.No.

Automobile Stocks in India (as per analyst ratings)

BUY Analyst Rating (in %)

1.

Samvardhana Motherson

94

2.

Mahindra & Mahindra

89

3.

Tata Motors

78

4.

Ashok Leyland

77

5.

Maruti Suzuki India

70

*Our stock selection criteria for top stocks based on analyst ratings are mentioned at the bottom of this blog.

Top Automobile Stocks in India in 2024 as per Market Capitalisation

The following table outlines the top auto stocks in India as per market capitalisation:

S.No.

Automobile Stocks in India (as per market capitalisation)

1.

Maruti Suzuki India

2.

Tata Motors

3.

Bajaj Auto

4.

Mahindra & Mahindra

5.

Eicher Motors

*Our stock selection criteria for top stocks based on Market Capitalisation are mentioned at the bottom of this blog.

Overview of Best Automobile Stocks in India as per Analyst Ratings 

Here is a detailed overview of the leading automobile sector stocks as per analyst ratings-

1) Samvardhana Motherson

Samvardhana Motherson Automotive Systems Group BV (SMRPBV), a part of the Motherson Group, is fully owned by Samvardhana Motherson International Limited (SAMIL), which was previously known as Motherson Sumi Systems Limited (MSSL).

It makes and supplies rear-view mirrors, wire harnesses and various interior and exterior modules for cars. Its product range includes console modules, door panels, bumpers, instrument panels, decorative interior trims and more. 

SAMIL's products are used in various vehicles like cars, bikes, trucks, tractors and even medical devices. Besides, it trades products, provides IT services and supports manufacturing for the automotive sector and others. SMRPBV works through its subsidiaries like Samvardhana Motherson Peguform (SMP), Samvardhana Motherson Reflectec (SMR), and Motherson Innovations (MI). With 148 facilities in 32 countries, SMRPBV is present in all major global automotive production areas.

2) Mahindra & Mahindra

Formerly known as Mahindra & Mohammed, Mahindra and Mahindra Limited was established in 1945 as an automobile manufacturing company in India. Mahindra Automotive provides a wide range of vehicles, including SUVs, buses, pickups, trucks, small commercial vehicles, electric SUVs and electric vehicles. 

Mahindra Group's other business verticals include farm equipment, real estate, technology services, renewable energy, financial services, logistics, hospitality and emerging businesses & equity investments. Its automotive sector has a broad international presence in regions like Asia-Pacific, Africa & the Middle East, and South Central America.

It has operations in New Zealand, Australia, Morocco, the UAE, Indonesia, Sri Lanka, Bhutan, Kenya, Nepal, Bangladesh, Mozambique, South Africa and many other countries.

3) Tata Motors

Headquartered in Mumbai, Tata Motors Limited (TML) stands as one of India’s largest automobile manufacturers, boasting a wide array of integrated, intelligent and electric mobility solutions.

The company operates in 2 main segments: automotive and other operations. Its automotive segment covers everything from developing, designing, manufacturing, assembling and selling vehicles, including vehicle financing, along with selling related parts and accessories. The other operations segment involves providing IT services, machine tools and solutions for factory automation.

Tata Motors' automotive business is further divided into 4 segments: commercial vehicles, passenger vehicles, luxury vehicles and electric vehicles. The commercial vehicle segment includes trucks, small trucks, buses and vans and smart mobility solutions. Its passenger and electric vehicles consist of cars and SUVs. The luxury vehicle segment includes Jaguars and Land Rovers. 

4) Ashok Leyland

Ashok Leyland, the flagship of the Hinduja Group, ranks as the second-largest manufacturer of commercial vehicles in India, the fourth-largest manufacturer of buses globally, and the 19th-largest manufacturer of trucks.

Headquartered in Chennai, the company mainly operates in 5 segments - trucks, buses, light vehicles, power solutions and defence. Under the trucks segment, it provides haulage, tippers, tractors and intermediate commercial vehicles (ICV). The bus product categories include city, intercity, staff, stage carrier, tourist school and college buses. 

Light vehicle product categories include light commercial vehicles, small commercial vehicles, goods carriers and passenger vehicles. Moreover, power solutions offered by the company include marine engines, diesel generators, industrial engines, agricultural engines and gas gensets. Ashok Leyland also produces defence vehicles such as armoured, light tactical, simulator, high mobility, logistics and tracked vehicles. It has a total of 9 manufacturing plants among which 7 are in India.

5) Maruti Suzuki India

Founded in 1981, Maruti Suzuki India Limited began its journey under the name Maruti Udyog Limited. In 1982, the company entered into a licence and joint venture agreement with Suzuki Motor Corporation, Japan.

The company primarily focuses on making and selling passenger vehicles within India. Maruti Suzuki has broadened its portfolio to include 16 car models with over 150 variants. 

Its lineup includes cars like Alto, Ertiga, Baleno, Super Carry, Eeco Cargo, XL6, Ignis, S-Cross, S-Presso, Celerio, WagonR, Swift, DZire, Ciaz and Eeco. In addition to manufacturing, Maruti Suzuki offers various services such as finance, insurance, accessories, parts, driving school, leasing and fleet management.

Maruti Suzuki operates 2 modern manufacturing plants situated in Gurugram and Manesar in Haryana. These units have cutting-edge technology and can produce approximately 1.5 million units per year.

Factors to Consider Before Investing in Automobile Stocks in India

Before you dive into buying the automobile sector stocks, it is crucial to consider some of the key factors that are mentioned below:

  • Consumer Preferences

Monitor shifts in consumer preferences, such as a growing demand for fuel-efficient or environmentally friendly vehicles. Stay informed about changes in consumer demand to make informed investment decisions.

  • Market Conditions

Before investing in automobile stocks, carefully evaluate the current economic climate and consumer sentiment. The demand for vehicles is greatly influenced by market conditions.

  • Financial Stability

Evaluate the financial health of potential investments by checking the automobile company’s sales figures, debt levels and cash flow. You must ensure the company has sufficient funds to sustain its operations.

  • Competitiveness and Growth Potential

Analyse each automobile company's competitiveness by examining market share, brand strength and industry position. In addition, you must also assess its involvement in emerging trends like electric mobility to gauge future growth potential.

  • Regulatory Environment

Stay updated on the automobile industry's ever-changing regulatory landscape. Government policies, emission standards, and safety regulations can significantly impact the industry.

Should You Invest in Automobile Stocks?

While the potential rewards from automobile stocks can be tempting, it is crucial to be aware of the associated risks. The automotive industry is cyclical, meaning sales often fluctuate with economic conditions. During downturns, demand for vehicles may drop, thus affecting the share prices of automobile stocks. Moreover, regulatory changes, such as stricter environmental standards, can impact manufacturers' costs and profitability. 

Furthermore, there is high competition within the industry, with numerous established companies constantly innovating and competing. This intense competition can put pressure on profit margins, making it challenging for companies to maintain consistent growth and profitability.

Additionally, disruptions in the supply chain, like component shortages or natural disasters, can hinder production and affect share prices. Therefore, before investing in automobile stocks, you need to conduct thorough research and stay informed about industry trends and developments to mitigate these risks effectively.

The Bottom Line 

To sum up, the Indian automobile sector presents promising investment opportunities. However, remember to analyse the various factors mentioned above before investing in automobile sector stocks and stay updated on emerging trends associated with electric vehicles.

While auto stocks have the potential to grow, you must conduct your due diligence to make informed investment choices that align with your financial goals and risk appetite. 

*Stock Selection Criteria for Top Stocks Based on Analyst Rating

Investors must carefully read through the following information on stock selection criteria while running through the stocks based on analyst ratings-

These stocks have been shortlisted as per Analyst ratings provided by the I/B/E/S (The Institutional Broker’s Estimate System) database, further aggregated by Refinitiv. Ratings are determined by analysts' forecasts of company performance, taking into account metrics like earnings per share, sales, and net income. These ratings should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).  

Before investing, investors must conduct independent research and not solely rely on the information provided here. This will allow investors to make appropriate investment decisions based on their financial goals, investment objectives and risk tolerance.

*Stock Selection Criteria for Top Stocks Based on Market Capitalisation

These stocks are chosen based on their market capitalization, which represents the total value of a company's outstanding shares. The selection is arranged in descending order, placing the largest companies first and the smaller ones later. This helps prioritize stocks based on their market size. 

It is important to note that market capitalization in no way guarantees a company’s performance or the returns from its stocks. However, it can be used as a criterion for shortlisting companies from within a sector. Investors should recognize that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. 

This stock selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here
Research Analyst - Aakash Baid

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Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd) Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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