World Environment Day: Top Electric Vehicle stocks to buy
5 min read 05 Jun 2023, 06:27 AM ISTWorld Environment Day: India has set a 30% electric vehicle adoption target by 2030. Companies such as Tata Motors, Mahindra & Mahindra, TVS Motors, Hero MotoCorp, and Amara Raja Batteries are likely to benefit.
PremiumWorld Environment Day: The Indian Government has set a 30% electric vehicle (EV) adoption target for the country by 2030 and the segment in India has seen major growth in the last few years. Analysts believe that such government adoption will bring in multifaceted impact, both economically as well as environmentally and this world environment day investors should focus to build an electrifying long term green portfolio.
When it comes to electric vehicles, the industry is seeing a moderate but steady increase in the number of companies offering their EV products. It appears that electric automobiles will become commonplace within the next ten years. As a result, the sector would expand and investors in the electric vehicle companies would probably see profits.
Let's look at some factors to think about when selecting electric vehicle stocks. Keep in mind the theme of EV to determine which stocks are likely to do well and benefit going forward.
So, companies that make electric vehicles - commercial vehicle, two-wheeler, four-wheelers such as Tata Motors, Mahindra & Mahindra, TVS Motors, Hero MotoCorp, etc; auto ancillaries - Sona BLW Precision Forging Ltd, Gabriel India Ltd, etc; software designing firm such as KPIT Technologies Ltd, Tata Elxsi Ltd, L&T Technology Services Ltd, etc; tyres - MRF Ltd, Ceat Ltd, etc; battery manufacturers like Amara Raja Batteries Ltd, Exide Industries, etc; commodities related stocks such as Hindustan Copper Ltd, Hindalco Industries Ltd, National Aluminum Company; silicon carbide relates stocks such as Carborundum Universal Ltd; chemical sector companies such as Tata Chemicals Ltd, Neogen Chemicals Ltd, etc; and PET film manufacturer stocks such as Uflex Ltd, Time Technoplast Ltd, etc. are all likely to benefit.
The absence of charging stations is another major obstacle to the practical use of electric vehicles. Currently, the country has more petrol stations than EV charging stations. Companies building electric charging stations would also benefit. Tata Power Ltd, Reliance Industries Ltd, and Bharat Petroleum Corporation Ltd are a few of the companies working in this field.
Some significant advances in the EV space so far
Tata Motors
Tata Motors reached 50,000 yearly sales of EVs in FY23, a significant milestone and a record high for the company. This marked a 154% increase over FY22. According to the company's statement, by promoting both the adoption of electric vehicles and the growth of its supporting ecosystem, it has successfully increased its leadership position. To achieve market-beating growth in the upcoming years, it will continue to launch new products, free up capacity, and push EV penetration even higher.
The company's goals for FY24 are to maintain market-beating growth, keep up the aggressive EV penetration drive, consolidate market share gains, push initiatives to achieve double-digit earnings before interest, taxes, depreciation, and amortisation (EBITDA) in the upcoming years, and maintain positive free cash flow.
The the company's top aims in the electric vehicle (EV) market are to continue to be aggressive in bringing EV penetration to double digits through an exciting range of vehicles and integrating the new Sanand factory into Tata Motors Ltd.
In May, the company's electric sales of domestic and international business in passenger vehicles segment rose 66% to 5,805 units as compared to 3,505 units in the same period a year-ago.
TVS Motors
Electric vehicle sales in Q4FY23 were 0.43 lakh units in the quarter that ended in March 2023 compared to 0.06 lakh units in the quarter that ended in March 2022 and 0.29 lakh units in the quarter that ended in December 2022.
In May 2023, TVS iQube electric sold 17,953 units as compared to 2,637 units in May 2022. Over 30,000 units have been ordered for the TVS iQube, and the company is optimistic that supply will continue to increase over the next few months.
Global brokerage Jefferies kept its bullish view on the shares in March, highlighting the firm's robust growth in the EV market.
With a 20% market share in March, TVS is now the second-largest participant in the market for electric two-wheelers (E2W), which is equivalent to its 24% market share for ICE scooters. While the firm gives little information about upcoming products, it aims to introduce a number of EVs in the 2W and 3W segments over the next 12 to 18 months, which should increase its EV volumes, according to Jefferies.
According to a worldwide brokerage research, Ola held 25% of the market share for electric two-wheelers in March, followed by Ather with 15% and Bajaj Auto Ltd with 5%.
Hero MotoCorp
During the fiscal year 2022–2023, Hero MotoCorp sold a total of 53.29 lakh motorcycles and scooters, up from 49.44 lakh units during the prior fiscal year.
The modern, fully integrated EV, VIDA V1 - Powered by Hero, made its premiere in FY23. Vida V1 deliveries have already started, and the company has already built up more than 300 public charging stations in 50 places throughout Delhi, Bengaluru, and Jaipur.
The fiscal year also saw Hero MotoCorp work on Premium Electric Motorcycles with Zero Motorcycles, a California (USA)-based manufacturer of electric motorcycles and powertrains.
Some top picks and suggestions analysts offer on the World Environment Day
Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities
Investors must concentrate on creating an electrifying long-term green portfolio on this World Environment Day. The biggest challenge of charging stations is also being addressed in a faster phase and the second biggest challenge of price difference between battery-powered and traditional fuel-run vehicles is also narrowing fast due to upgraded technology.
"Hence considering the faster adoption of EV on roads, I believe this next decade would be for electric vehicle revolution and investors should target to charge their portfolio with top 5 electric vehicle stocks in each segment likewise Tata Motors (EV leader in passenger segment), Olectra Greentech (EV Leader in commercial segment), Mahindra &Mahindra (Target to become leader in EV 3 wheeler segment) and TVS/Bajaj Auto (Leaders in 2 Wheeler segments). Investment in these segments should be for a minimum of 3-5 years to generate electrifying long term returns," said Tapse.
Vinit Bolinjkar, Head of Research, Ventura Securities
According to Bolinjkar, on the World Environment Day, investors could consider electric vehicle stocks such as Olectra greentech, Sonacomstar, Tata Motors, UNO Minda and Gulf oil.
Avinash Gorakshakar, Head-Research at Profitmart Securities
Leading electric vehicle stocks which look interesting are Sona Comstar which is a leading component player to global EV players. Another company is Greaves cotton that makes the Aether brand of 2 wheeler EVs is also doing well here Tata motors also enjoys a large market share in the EV passenger car market followed by Mahindra and Mahindra which is also hearing up to launch a new range in the EV segment.
"While the installed base of EVs is yet small we expect a strong growth in this segment over the next 3 to 4 years ahead as they are pollution free and require no running cost once the initial investment is incurred," said Gorakshakar.
