Best Automobile Stocks in India

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-

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:

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. 

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