The Indian auto sector is one of the most promising when it comes to investing your money in 2022. The NIFTY AUTO index gave a return of 30.61 per cent in one year, while the NITFY 50 provided a 1.99 per cent return in one year. So, the Auto Index gave 15.3 times more returns compared to Nifty 50.
The Indian automobile sector is expected to reach Rs 16-18 trillion by 2026, according to a report by the Indian Brand Equity Foundation (IBEF).
The export trends are also on the higher side. Passenger and commercial vehicles noted a rise of 42.8 per cent and 83.3 per cent in exports, respectively, according to data from the Society of Indian Automobile Manufacturers.
Interestingly, all the major Indian automobile manufacturers have slowly begun their transition to the electric vehicles (EVs) segment.
Also, this can be the best time to invest in the auto sector, as the festive season starts from Raksha Bandhan up till Diwali, and automobile sales are on the up across India.
“The revenue growth outlook for CY22 for a majority of the players is 10-12 per cent year-on-year (y-o-y), despite adversities in the form of recession fears, drought, and supply-chain issues impacting demand estimates,” says an equity research report by ICICI Securities.
Top 5 Stocks By Market Cap
Here are the top-5 stocks by Market Cap
Maruti Suzuki (MARUTI)
Maruti Suzuki is the leading manufacturer in the passenger vehicle industry. It was founded in 1981, and it is partly owned by the Government of India. Maruti Suzuki’s market capitalisation is Rs 2.6 lakh crore. The price of the stock is Rs 8,880.95 as of the closing time on September 6, 2022. The stock has given 29.24 per cent return in one year. The company’s June 22 quarterly revenue is Rs 26,510 crore, and it noted a 41.14 per cent growth y-o-y.
Maruti plans to invest Rs 18,000 crore towards setting up electric vehicles manufacturing units, and thus will be prepared for the transition from gasoline to electric vehicles.
Tata Motors (TATAMOTORS)
The global automobile manufacturer is India’s largest vehicle manufacturer with presence across segments from trucks, where it is the dominant player, to luxury passenger vehicles. It owns the Jaguar Land Rover brand in the luxury car segment. Its market capitalisation is Rs 1.6 lakh crore. The price of the stock is Rs 457.95 at the closing time as on September 6, 2022. The stock has given 54.66 per cent return in one year. The company’s June 22 quarterly revenue is Rs 71,935 crore. It registered an 8.32 per cent growth y-o-y. Tata Motors has invested heavily in the EV infrastructure and is well positioned to manufacture almost all the parts of an EV vehicle independently.
Mahindra and Mahindra (M&M)
Mahindra and Mahindra has noted a meteoric rise in recent years. It began as a steel trading company in Ludhiana in 1945, but soon pivoted to manufacturing light commercial vehicles and tractors. At present, its market capitalisation is around Rs 1.57 lakh crore. The price of the stock is Rs 1,303 at the closing time on September 6, 2022. The stock has returned 74.93 per cent in one year. The company’s June 22 quarterly revenue is Rs 28,630 crore. It noted a 47.81 per cent growth y-o-y.
M&M was among the pioneers in the EV passenger vehicle segment, starting off with the minicompact category, to the newly unveiled SUVs with contemporary designs.
Bajaj Auto (BAJAJ-AUTO)
Bajaj Auto is a global automotive manufacturer based out of Pune. They manufacture two-wheeler vehicles and auto rickshaws. The company was founded in 1945. Initially, they were importers of two and three-wheeler vehicles, but later pivoted to manufacturing two-wheeler, gaining license from Piaggio, Italy to manufacture Vespa scooters in India. At present, their market capitalisation is around Rs 1.16 lakh crore. The price of the stock is 3,934 as on September 6, closing time. Their stock has returned 4.69 per cent in one year. The company’s June 22 quarterly revenue is Rs 8,320 crore. They registered a 7.9 per cent growth year-on-year.
They have already entered the EV market, and have an electric version of their classic Chetak scooter.
Eicher Motors (EICHERMOT)
Eicher Motors is a multinational automotive company, and it is one of the leading players in the commercial vehicles and motorcycles segment. They are now the parent company of the British make iconic motorcycle brand, Royal Enfield. The company was founded in 1948 as Goodearth Company to provide services to imported tractors. At present, their market capitalisation is around Rs 93,500 crore. The price of the stock is Rs 3,405 as September 6, closing time.
The stock has returned 21.19 per cent in one year. The company’s June 22 quarterly revenue is Rs 3,330 crore. It registered a growth of 71.18 per cent annually.
Eicher Motors already have an electric bus for sale in the market, and the Royal Enfield brand is currently working on a range of premium electric motorcycles.
