Best EV Stocks In India Based on 5yr CAGR – July 2024

The transportation sector is continuously evolving, marked by a substantial shift toward electric vehicles (EVs) as a sustainable alternative to traditional fossil-fuel-powered transport. This transition involves not only adopting new technologies but also adapting existing businesses to stay competitive with EV pioneers like Tesla. The shift towards EVs reflects changing industry dynamics and a growing emphasis on environmental considerations.

EV stocks in India can present a promising opportunity for savvy investors looking to stay ahead in the investment landscape. According to a report by Fortune Business Insights, the Indian electric vehicle market is expected to grow from USD 3.21 billion in 2022 to USD 113.99 billion in 2029, with a robust compound annual growth rate of 66.52%. In this article, identify the top EV stocks for 2024 based on their 5-year CAGR.

5 Best EV Stocks In India – 5 yr CAGR Basis (July 2024)

Note: The 5 best EV stocks list provided here is as of July 16, 2024. The stocks are sorted as per their 5-yr CAGR.

Overview of the Top EV Stocks in India 2024

1. Tata Motors Ltd

Tata Motors is one of the leading Indian automakers, with a wide portfolio of cars, SUVs, trucks, buses, and commercial vehicles. It is a significant player in the electric vehicle (EV) space, offering the Nexon EV and Tigor EV hatchbacks. Tata Motors also owns Jaguar Land Rover, a British luxury car manufacturer with its own range of electric vehicles.

For FY24, Tata Motors reported record revenues of ₹4,37,900 crore, an increase of 26.6% compared to the previous year, with a net profit of ₹31,800 crore, reflecting a rise of ₹29,100 crore year-on-year.

Key financial metrics

• Net profit margin: 7.06%
• Debt to Equity: 115.22%
• Return on Equity (ROE): 43.10%

2. TVS Motor Company Ltd

TVS Motor Company is a major Indian two-wheeler manufacturer known for its motorcycles, scooters, and mopeds. They are in the electric scooter market with the iQube.

The company achieved a 101% year-on-year growth in EV two-wheeler sales in FY 2023-24. Revenue reached ₹31,925 crore, reflecting a 20.5% increase year-on-year. Profit After Tax (PAT) amounted to ₹2,083 crore, marking a 40% year-on-year growth.

Key financial metrics

• Net profit margin: 6.52%
• Debt to Equity: 25.40%
• ROE: 30.23%

2. Mahindra and Mahindra Ltd

Mahindra and Mahindra is a diversified Indian conglomerate with a presence in automobiles, tractors, motorcycles, and farm equipment. They offer electric three-wheelers for commercial use and are developing electric SUVs under their Mahindra Electric Mobility brand.

In FY 2024, the consolidated PAT reached ₹11,269 crore, a 25% increase compared to the previous year. The company’s revenue stood at ₹1,39,078 crore, reflecting a 15% rise from ₹1,21,362 crore in FY 2023.

Key financial metrics

• Net profit margin: 7.91%
• Debt to Equity: 134.07%
• ROE: 15.37%

3. Bajaj Auto Ltd

Bajaj Auto Ltd is an Indian two-wheeler manufacturer known for its Pulsar and Platina motorcycles and the popular CT franchise. They recently launched the Bajaj Freedom 125, India’s first CNG-powered two-wheeler, alongside exploring electric options in three-wheelers.

In FY 2024, the consolidated profit reached ₹7,478.79 crore, a 33% increase compared to the previous year’s ₹5,627.60 crore. The company’s total income stood at ₹46,087.68 crore, reflecting a 22% rise from ₹37,609.02 crore in FY 2023.

Key financial metrics

• Net profit margin: 16.55%
• Debt to Equity: 6.60%
• ROE: 26.43%

4. Maruti Suzuki India Ltd

Maruti Suzuki is India’s largest passenger car manufacturer, known for its affordable and fuel-efficient cars like the Swift, Dzire, and WagonR. The company is planning to enter the electric vehicle market by 2025 with its Concept Electric SUV eVX.

The company reported a net profit of ₹1,32,094 million in FY 2023-24, reflecting a 64% increase compared to ₹80,492 million in FY 2023. Additionally, the company achieved net sales of ₹1,349,378 million in FY 2024, representing a growth of 19.9% over net sales of ₹1,125,008 million in FY 2023.

Key financial metrics

• Net profit margin: 9.23%
• Debt to Equity: 2.02%
• ROE: 14.02%

Overview of the EV Industry in India

The electric vehicle industry in India is poised for significant growth in the coming years. The country has set ambitious targets to increase the share of EV sales to 30% for private cars, 70% for commercial vehicles, 40% for buses, and 80% for two-wheelers and three-wheelers by 2030. In total, this is expected to result in around 80 million EVs on Indian roads by that year.

Additionally, India aims to produce 100% of its EVs locally under the ‘Make in India’ initiative. According to a report by Fortune Business Insights, the Indian electric vehicle market size is projected to expand from USD 3.21 billion in 2022 to USD 113.99 billion by 2029, achieving a compound annual growth rate of 66.52%.

The government’s initiatives, such as the Faster Adoption of Manufacturing of Electric Vehicles Scheme – II (FAME – II) and the Production Linked Incentive Scheme (PLI), aim to incentivise electric vehicle manufacturers.

However, realising this potential will require addressing several structural challenges. These include ensuring robust policy support, enhancing safety standards, reducing battery costs, developing new products, optimising distribution channels, prioritising specific customer segments, advancing software technology, and expanding charging infrastructure. The combination of these efforts will be crucial in harnessing the full potential of India’s EV market.

Factors To Consider While Investing in EV Stocks

Investing in EV stocks requires careful consideration of various factors, given the unique dynamics of this rapidly evolving sector. Here are some crucial factors to keep in mind:

1. Technological Innovation: Evaluate the company’s investment in research and development (R&D). Companies that are leaders in innovation may have a competitive advantage in terms of battery technology, charging solutions, or other EV-related technologies.
2. Production Capability and Supply Chain: Assess the company’s ability to scale up production. This includes having a robust supply chain to handle the demand for EVs and managing the sourcing of key components like batteries.
3. Regulatory Environment: Consider the impact of government policies and regulations on the EV industry. Incentives, subsidies, or regulations promoting EV adoption can significantly affect the market.
4. Consumer Acceptance and Brand Strength: Understand the market’s acceptance of the company’s products. A strong brand and positive consumer reception can be indicative of future success.
5. Competition: Analyse the competitive landscape. A company that has a competitive edge in terms of technology, cost, or market share could be a more promising investment.
6. Sustainability and ESG Factors: Consider environmental, social, and governance (ESG) factors, as sustainability is a core aspect of the EV industry. Companies with strong ESG practices may be better positioned for long-term growth.
7. Long-Term Perspective: Maintain a long-term investment perspective. The EV industry is growing, but it may take time for companies to realise their full potential.

Conclusion

Investing in the rapidly evolving Electric Vehicle EV sector in India offers a unique opportunity for investors. With the convenience of platforms like Angel One, opening a demat account and beginning your investment journey in EV stocks becomes more accessible and easy.

However, it’s important to remember that stock market investments have inherent risks. Therefore, seeking guidance from a financial advisor and conducting thorough research before making any investment decisions is advisable.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.