Automobile Sector Stocks

The Indian automobile industry is a major contributor to the country’s economic growth. It is not only a reflection of consumer spending but also a vital link in various other sectors. Investors seeking to align their portfolios with this dynamic industry can consider automobile industry stocks.

However, the auto sector is quite dynamic and influenced by many factors, such as economic conditions, government regulations, consumer preferences, technological advancements, and the financial health of the companies. All these elements can impact auto sector stock prices.

If you’re considering investing in this sector, it’s crucial to do thorough research. Analyze the company’s fundamentals and stay updated on industry trends. This article will give you a comprehensive overview of auto industry stocks, and reading it carefully will help you make informed investment decisions.

Here is the list of Top 10 Auto Stocks in 2024:

• Mahindra & Mahindra Ltd.

• Tata Motors

• Ashok Leyland

• Hero Motocorp

• TVS Motor Company

• Bajaj Auto

• Samvardhana Motherson

• Eicher Motors

• Olectra Greentech Ltd. 

• SML Isuzu 

Mahindra & Mahindra Ltd: 

Market Cap (In crores as of 06-08-24)	CMP	All-Time High Level	PE Ratio	5-Year CAGR Return	ROCE
₹3,27,433	₹ 2,633	₹ 3014	29.6	37%	13.6%

Mahindra & Mahindra is a leading Indian multinational conglomerate. Established in 1945, it’s renowned for its strong presence in automotive, farm equipment, and financial services. The company is the world’s largest tractor manufacturer by volume and a major player in the Indian SUV market.

The company earned Rs. 37,218 crores in revenue for the quarter ending June 30, 2024, compared to Rs. 33,892 crores for the same quarter last year registering a growth of 9.35% in revenues. The profit during the quarter was Rs. 3,546 crores, slightly down from Rs. 3,684 crores in the same quarter the previous year, marking a marginal decrease of 3.8%.

Tata Motors:

Market Cap (In crores as of 06.08.24)	CMP	All-Time High Level	PE Ratio	5-Year CAGR Return	ROCE
₹3,72,495	₹ 1,014	₹ 1,179	11.0	52%	20.1%

Tata Motors is a leading Indian multinational automotive company. Founded in 1945, it’s a major player in commercial and passenger vehicles. Known for its robust and affordable offerings, Tata Motors has a strong presence in India and global markets. The company is at the forefront of electric vehicle development and sustainable mobility solutions.

The company reported a revenue of Rs.108,048 crores for the quarter ending June 2024, an increase from Rs.1,02,236 crores in the same quarter last year registering an increase of 5.5%. The profit for the quarter was Rs. 5,692 crores, up from Rs. 3,301 crores in the same quarter the previous year, registering an increase of 53.11%.

Ashok Leyland

Market Cap (In crores as of 06.08.24)	CMP	All-Time High Level	PE Ratio	5-Year CAGR Return	ROCE
₹71,531	₹ 243	₹ 259	28.6	31%	15%

Ashok Leyland is a leading Indian commercial vehicle manufacturer. Established in 1948, it offers a wide range of vehicles including trucks, buses, and defense vehicles. Known for its robust and reliable products, Ashok Leyland has a significant market share in India and exports to several countries. The company is focused on technological advancements and sustainable mobility solutions.

The company posted a revenue of Rs. 10,724 crores for the quarter ending June 2024, up from Rs. 9,691 crores in the same quarter last year. There was a growth of 10.12% in the revenues. However, the profit for the quarter was Rs. 551 crores,  5.8% less than the profit of Rs. 584 crores recorded in the corresponding quarter of the previous year.

Hero MotoCorp

Market Cap (In crores as of 06.08.24)	CMP	All-Time High Level	PE Ratio	5-Year CAGR Return	ROCE
₹1,03,449	₹ 5174	₹ 5,241	5,895	15%	29.1%

Hero MotoCorp is India’s largest two-wheeler manufacturer. Known for its fuel-efficient and affordable motorcycles and scooters, it dominates the Indian market. The company has a strong global presence and is continuously expanding its product range. Hero MotoCorp is committed to sustainable mobility and technological advancements.

The company reported a revenue of Rs. 9,617 crores for the quarter ending March 2024, an increase from Rs. 8,434  crores in the same quarter last year, reflecting a decent growth of 13.10%. The profit for the quarter was Rs. 943 crores, which is 15% higher than the Rs. 811 crores recorded in the corresponding quarter of the previous year.

TVS Motor Company

Market Cap (In crores as of 06.08.24)	CMP	All-Time High Level	PE Ratio	5-Year CAGR Return	ROCE
₹1,17,775	₹ 2479	₹ 2602	68.8	46%	14.7%

TVS Motor Company is a leading Indian multinational two-wheeler manufacturer. Known for its stylish and technologically advanced bikes and scooters, it has a strong domestic and international presence. TVS is committed to innovation and sustainability, offering a wide range of products to cater to diverse customer needs.

The company reported a revenue of Rs. 10,407 crores for the quarter ending June 2024, up from Rs. 9056 crores in the same quarter last year, showing a significant growth of 12.98%. The profit for the quarter was Rs. 485 crores, marking a 9.5% increase from the Rs. 441 crores recorded in the corresponding quarter of the previous year.

Bajaj Auto:

Market Cap (In crores as of 06.08.24)	CMP	All-Time High Level	PE Ratio	5-Year CAGR Return	ROCE
₹2,67,705	₹ 9589	₹ 10,039	33.4	28%	33.5%

Bajaj Auto is a leading Indian multinational automotive company renowned for its motorcycles, scooters, and auto rickshaws. As the world’s third-largest motorcycle manufacturer, Bajaj has a strong domestic presence and a growing global footprint. Known for its fuel-efficient and durable vehicles, the company has a rich history and a significant contribution to India’s automotive industry.

The company announced a revenue of Rs. 11,932 crores for the quarter ending June 2024, which is an increase from Rs. 10,312 crores in the same quarter the previous year, reflecting a notable growth of 14.5%. The quarterly profit was Rs.1942 crores, representing a 16.6% rise from the Rs.1644  crores reported in the corresponding quarter of the prior year.

Samvardhana Motherson

Market Cap (In crores as of 06.08.24)	CMP	All-Time High Level	PE Ratio	5-Year CAGR Return	ROCE
₹ 1,22,627	₹ 181	₹ 209	42.8	25%	13.7%

Samvardhana Motherson International Limited is a leading global automotive components and systems manufacturer. With a strong presence in the global automotive industry, the company offers a wide range of products and services. Known for its engineering expertise and innovation, Samvardhana Motherson caters to major automotive OEMs worldwide.

The company reported a revenue of Rs. 28,868 crores for the quarter ending June 2024, up from Rs.22,462 crores in the same quarter last year, showing a notable growth of 28.5%. The profit for the quarter was Rs. 1,097 crores, marking a remarkable 69.5% increase from the Rs. 648 crores recorded in the corresponding quarter of the previous year.

Eicher Motors

Market Cap (In crores as of 06.08.24)	CMP	All-Time High Level	PE Ratio	5-Year CAGR Return	ROCE
₹ 1,26,666	₹ 4623	₹ 5059	31.6	21%	31.1

Eicher Motors is a leading commercial vehicle manufacturer in India, primarily known for its iconic truck brand, Eicher. It has a strong presence in the domestic market and is expanding its footprint globally. The company focuses on providing reliable, fuel-efficient, and durable commercial vehicles to meet the evolving needs of the transportation industry.

The company announced a revenue of Rs.4256 crores for the quarter ending March 2024, an increase from Rs. 3804 crores in the same quarter the previous year, reflecting a notable growth of 11.2%. The profit for the quarter reached Rs.1070 crores, representing a significant 16.5% rise from the Rs. 906 crores reported in the corresponding quarter of the prior year.

Olectra Greentech Ltd. 

Market Cap (In crores as of 06.08.24)	CMP	All-Time High Level	PE Ratio	5-Year CAGR Return	ROCE
₹ 12,991	₹ 1,583	₹ 2,222	169	51%	14.8%

Olectra Greentech is a leading electric vehicle manufacturer in India. The company specializes in electric buses, electric three-wheelers, and charging infrastructure. With a focus on sustainable mobility, Olectra Greentech is contributing to India’s electric vehicle revolution.

The company reported  a revenue of  Rs. 289 crores in the quarter ending March 2024 which was 26% down from Rs. 376 crores in the previous year. Net profit was also notably low at Rs. 15 crores, which is a decrease of 60.46% compared to the Rs. 28 crores recorded for the same period last year.

SML Isuzu Ltd.

Market Cap (In crores as of 06.08.24)	CMP	All-Time High Level	PE Ratio	5-Year CAGR Return	ROCE
₹ 3,005	₹ 2,082	₹ 2,480	24.5	30%	23.8%

SML Isuzu is a leading commercial vehicle manufacturer in India, known for its light and medium commercial vehicles. A joint venture with Sumitomo Corporation and Isuzu Motors, the company offers a range of trucks, buses, and ambulances. With a focus on quality and reliability, SML Isuzu caters to the transportation needs of various sectors.

The company reported a revenue of Rs. 746 crores for the quarter ending June 2024, up from Rs. 632 crores in the same quarter last year, reflecting a notable growth of 16.5%. The quarterly profit reached Rs. 46 crores, representing a significant 35.8% increase from the Rs. 32 crores recorded in the corresponding quarter of the previous year.

What are Automobile Stocks?

Auto stocks represent publicly traded companies involved in the design, manufacturing, marketing, and sales of motor vehicles. This encompasses a broad range of players, including:

• Passenger car manufacturers: Maruti Suzuki, Tata Motors, Mahindra & Mahindra
• Two-wheeler manufacturers: Hero MotoCorp, Bajaj Auto, TVS Motor Company
• Commercial vehicle manufacturers: Ashok Leyland, Eicher Motors
• Auto component manufacturers: Bosch, Motherson Sumi Wiring India, Bharat Forge

These companies cater to the ever-evolving needs of the Indian consumer, offering a diverse range of vehicles from budget-friendly hatchbacks to premium SUVs, fuel-efficient motorcycles to powerful scooters, and robust trucks to comfortable buses.

Future of Automobile Sector Stocks

The future of auto sector stocks is driven by several key factors:

• Rising disposable income: As the Indian economy continues to grow, disposable incomes are expected to rise, leading to increased demand for personal vehicles.
• Favorable demographics: India has a young population with a growing appetite for mobility solutions.
• Government initiatives: The government’s focus on infrastructure development and policies promoting electric vehicles will create a supportive environment for the industry.
• Technological advancements: The adoption of new technologies like electric vehicles, connected cars, and autonomous driving will create fresh opportunities for growth.

However, there are also challenges to consider:

• Economic fluctuations: An economic slowdown can significantly impact consumer spending, thereby affecting demand for automobiles.
• Fuel price volatility: Rising fuel prices can deter potential buyers, particularly in the two-wheeler segment.
• Regulatory changes: Stringent emission norms and safety regulations can increase production costs for manufacturers.

Benefits of Investing in Auto Sector Stocks

Investing in auto sector stocks can offer several advantages:

• Diversification: Automobile sector stocks can add diversification to your portfolio, reducing overall risk.
• Dividend income: Some automobile companies pay regular dividends, providing investors with a steady stream of income.
• Hedging against inflation: Over time, the price of automobiles tends to rise along with inflation, potentially offering a hedge against its effects.

However, it’s important to remember that investing in stocks carries inherent risks. These include:

• Market volatility: The stock market can be volatile, and the prices of automobile sector stocks can fluctuate significantly.
• Company-specific risks: The performance of an individual company can significantly impact the value of its stock.
• Sector-specific risks: Events affecting the automobile industry as a whole, such as a slowdown in demand or a rise in fuel prices, can negatively impact all companies in the sector.

How to Invest in Automobile Sector Stocks

There are several ways to invest in auto sector stocks:

• Direct stock purchase: You can buy shares of individual companies through a brokerage account. This approach requires research and analysis to select the right companies.
• Mutual funds: Many mutual funds invest in a basket of stocks, including automobile sector stocks. This allows for diversification and reduces risk.
• Exchange-traded funds (ETFs): ETFs that track indices focused on the automobile sector can be a convenient way to gain exposure to the industry.

Before investing, it’s crucial to:

• Do your research: Analyze the financial health and future prospects of individual companies or the sector as a whole.
• Understand your risk tolerance: Choose investment options that align with your risk appetite.
• Invest for the long term: The stock market is cyclical, and long-term investment strategies are typically more successful.
• Diversify your portfolio: Don’t put all your eggs in one basket. Spread your investments across different sectors and asset classes.

Additional Considerations:

• Investment horizon: Consider how long you plan to hold your investment. Long-term investors can weather market fluctuations better.
• Investment goals: Align your investment strategy with your financial goals, such as retirement planning or wealth creation.
• Seek professional advice: If you are a new investor, consider consulting a financial advisor for personalized guidance.

By understanding the dynamics of the automobile sector, its future outlook, and the associated risks and benefits, you can make informed decisions about investing in auto sector stocks.

*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

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