India is currently going through an electric vehicle revolution.
Currently, the electric vehicle (EV) field is dominated by electric vehicle and battery maker Elon Musk’s Tesla.
In January 2020, the company was valued at $117 billion, and by the end of that year who would have thought that number would skyrocket to over $650 billion. That also happens in a short period of time.
This hyper-acceleration has spurred investors to look for companies that could benefit from the disruption of EVs.
Also, with the Indian government firing cylinders to electrify the automotive sector, investors cannot take their eyes off the companies that are even remotely involved in the sector, even if it is a losing company.
As we all know, auto companies won’t be the only ones benefiting from this huge trend. There are many opportunities for different industries. Many stocks have now become a representation of investors looking to participate in the ongoing global electric vehicle revolution.
In this article, let’s take a look at the top EV stocks from each sector and the types of returns they’re generating for investors.
#1 Commercial Vehicle
Top EV stocks in the commercial vehicle sector include Tata Motors, Olectra Greentech, JBM Auto, Ashok Leyland, SML Isuzu, Eicher Motors and M&M.
State governments are calling for tenders to buy electric buses for public transport. This spurred strong orders for electric bus companies such as Ashok Leyland, JBM Auto, Olectra Greentech, Tata Motors and Eicher Motors.
Tata Motors was one of the first companies to develop an all-electric commercial vehicle on its own. It is preparing to launch its first electric truck. Tata Motors has taken the lead in the electric passenger car segment with over 70% market share.
Olectra Greentech is one of the lesser-known stocks in the electric vehicle space. It has major interests in electric buses, composite insulating materials, amorphous core distribution transformers, data analysis and IT consulting. The company has a healthy order book for 1,325 e-buses.
Recently, Maharashtra Environment Minister Aditya Thackeray announced that all of Mumbai’s public transport buses will be electric by 2028.
This has positive implications as public buses being replaced by trams will provide an opportunity for electric bus manufacturers.
Let’s now look at how these companies have performed in terms of stock performance over the past year or so.
#2 Two, three and four wheelers
This is the most obvious choice for investors looking to play on EV opportunities. Select car companies that are producing electric vehicles in the two, three and four wheeler segment.
The 4-wheeler segment includes Tata Motors while the 2- and 3-wheeler segment includes TVS Motors, Bajaj Auto, Hero MotoCorp, Greaves Cotton, …
Although there are some holes in the space for 4-wheel electric vehicles such as limited product availability, high prices and insufficient batteries, the companies still have big plans for the future.
The Indian car market is dominated by two-wheelers, accounting for 75% of all vehicles sold in the country. India’s domestic two-wheeler companies are fast-tracking their electric vehicle plans to capture a reasonable market share in the coming years.
India is currently going through an electric vehicle revolution with high adoption in the 2/3/4 wheeler space and growing interest in the private 4-wheeler sector.
Here’s how the top stocks in the segment have performed this year.
#3 EV battery manufacturer
Lithium-ion (Li-ion) cells are the heart of electric vehicles. This type of battery is the most expensive component in an electric vehicle, accounting for 40-50% of its cost. These batteries have changed the way products are designed in the modern world.
Auto companies are claiming lithium ion batteries are the future of automotive power and rightly so because of its inherent advantages. Eg, lithium ion battery much lighter in weight than other rechargeable batteries and holds a good charge while the energy output from these batteries remains quite stable.
The rapid penetration of electric vehicles in India will boost the demand for lithium ion batteries in the country.
Currently, most electric vehicle manufacturers import cells and batteries from China, the world’s top producer of lithium-ion batteries.
However, the companies are now accelerating their plans to produce lithium-ion batteries in the country, hoping to take advantage of a government subsidy of Rs 18,000.
The leading players in this segment are Amara Raja Batteries, Exide Industries and Kabra Extrusion Technik. Although the part of a lion is with Amara Raja and Exide.
Here’s how stocks have performed over different time periods.
#4 EV charging infrastructure
Just as lithium-ion batteries are the heart of an electric vehicle, the charging point is the next big thing.
Electric vehicle companies are spending a lot of capital and energy on charging station infrastructure.
By 2027, the business of EV charging stations could reach an estimated $29.7 billion, at a CAGR of around 40% during 2020-2027.
To fast-track electric vehicle adoption in India, the government is planning to install up to 70,000 electric vehicle chargers across the country over the next few years. Work has been carried out.
At least 22,000 EV charging stations will be set up with a base of 70,000 petrol pumps. For this, oil companies like the Petroleum Corporation of India and BPCL have committed to use their stores to set up 17,000 EV charging centers.
Companies are linking up with startups to take advantage of this opportunity. Hero Electric has announced a partnership with Bengaluru-based EV charging startup to set up a thousand charging stations across India.
The leading listed companies involved in this sector include, Tata Power, Indian Oil Corporation (IOC), BPCL, Reliance Industries, NTPC and Power Grid Corporation.
Here’s how the above stocks from the toll infrastructure segment have performed this year.
#5 Chemicals
To advance the specialty product market, chemical companies have entered the lithium-ion battery business, where they plan to build an integrated business that includes cell manufacturing, battery recycling and battery production.
The leading stocks involved in this sector are Tata Chemicals, Gujarat Fluorochemicals, Neogen Chemicals, and the recently listed Tatva Chintan Pharma.
Gujarat Fluorochemicals has entered the new age business including chemicals & fluoropolymers for electric vehicles, batteries, solar panels, hydrogen fuel cells. The company is in the process of setting up an integrated battery chemistry complex.
Meanwhile, Tatva Chintan Pharma is India’s sole distributor of chemicals used in zeolite crystals to manufacture detergents, air purifiers and dietary supplements.
Here’s how stocks have performed over different time periods.
No. 6 Auto Clinic
Indian auto accessories companies are working with global players in areas like harnesses, rearview mirrors, cockpits, bumpers, etc.
Companies including Sona BLW Precision, Motherson Sumi, Suprajit Engineering, Minda Industries and Fiem Industries have announced acquisitions of EV technology companies or are strengthening their components businesses with a global market outlook.
Component manufacturers understand that investing in EV component technology and capacity is vital.
Here’s how the top companies have rewarded investors over the past year.
#7 Commodities
Demand for items like lithium, cobalt, copper and nickel is skyrocketing due to the growing demand for electric vehicles.
Since these metals are limited and are the most commonly used metals to make electric car batteries, there could be a shortage of supply.
Hindustan Copper is betting big on electric vehicles to drive demand growth. The production of electric vehicles will consume four times more copper than traditional internal combustion engines. This bodes well for companies like Hindustan Copper, NALCO and Hindalco.
These companies can greatly benefit from the changes in the automotive sector from micromotor vehicles to electric vehicles, as the main items that will be used in electric vehicles are copper and aluminum.
This is how much you would have now if you invested Rs 100 per share a year ago.
#8 Software (R&D)
Auto companies are stepping up investment in technology by investing more in research and development (R&D).
According to the report, spending by auto companies is expected to grow by 6.5% on average, with a focus on software.
Tata Elxsi said in its annual report that automakers and component manufacturers are increasing their R&D expenditures on initiatives that develop driver-assistance and Industry 4.0.
The company works with leading OEMs and system suppliers to develop next-generation hybrid vehicles.
Meanwhile, L&T Technology’s focus on disruptive businesses gives it an edge over its peers. It has invested in electricity, autonomous and connected vehicles, technology, 5G, artificial intelligence and digital products.
This is how Tata Elxsi and L&T Technology have performed over the past year.
#9 PET Film Maker
Did you know that thin packaging polyester (PET) film is used in the electric vehicle industry?
Polyester film is used in lithium-Ion batteries, and is also used to control energy and energy density, as well as to increase battery safety and life cycle.
Below are the top companies involved in the field and their performance over different time periods.
Why EV stock will continue to generate great returns
All the hype around Shares of EV is for a good reason. Slowly, electric vehicles are replacing internal combustion engine (ICE) vehicles.
As we have seen above, the transition to 100% EV will present an opportunity not only for EV manufacturers but also for a number of other players in the EV space.
You just need to invest in the right EV stocks that can make your fortune.
Luckily, Equitymaster research has uncovered a little-known way to capitalize on this 15-fold opportunity in the electric vehicle space.
So before you invest a single rupee in any EV stock, we strongly advise you watch this video to study the results of our latest research project.
Happy investing!
(This article is provided from Equitymaster.com)
(This story has not been edited by NDTV staff and was automatically generated from the feed provided.)
