Top 3 EV Stocks for Long Term Investment

Table of Contents

1. Introduction
2. The Growth of the Electric Vehicle Industry
3. The Potential of the Indian Electric Vehicle Market
4. The Rise of Mahindra and Mahindra in the EV Sector
   • 4.1 Mahindra Electric Automobile Limited (MEAL)
   • 4.2 Mahindra's Growing Market Share of SUVs
   • 4.3 Mahindra's InGlow Bond Electric Platform
   • 4.4 Mahindra's Partnership with BYD and Farasis for Battery Supply
   • 4.5 Strong Financial Performance of Mahindra and Mahindra
   • 4.6 Synergies in Different Sectors of Mahindra Group
5. Comparison of Mahindra and Mahindra with Tata Motors
6. Amaraja Batteries: Poised for Growth in the EV Market
   • 6.1 Amaraja's Position as the Second Largest Battery Manufacturer in India
   • 6.2 Investment in Lithium-Cell Giga Factory
   • 6.3 Financial Performance and Valuation of Amaraja Batteries
   • 6.4 Debt Position and Shareholding Pattern
7. Samvardhana Motherson International Limited: A Promising EV Component Supplier
   • 7.1 Background and Business Divisions of Samvardhana Motherson
   • 7.2 Strong Order Book from EV OEMs
   • 7.3 Financial Analysis and Valuation of Samvardhana Motherson
   • 7.4 Share Price Movement and Shareholding Pattern
8. Conclusion

Article

The Future is Electric: Exploring the Potential of the Indian Electric Vehicle Market

With the rapid advancement of technology, the automobile industry is experiencing a profound transformation. The rise of electric vehicles (EVs) has captured the Attention of not only passionate environmentalists but also investors and stakeholders looking for innovative growth opportunities. One particular region that holds immense potential in the EV sector is India. In this article, we will Delve into the growth prospects of the Indian electric vehicle market and highlight three massively discounted EV stocks that investors should consider for the long term.

The Growth of the Electric Vehicle Industry

To understand the potential of the Indian electric vehicle market, let's take a moment to reflect on the growth trajectory of the EV industry globally. Just like the IT industry in the early 1990s, the EV sector is currently at a stage of rapid expansion. Companies like Infosys, which began with modest revenues and skyrocketed to tremendous success, are reminiscent of the current situation in the EV market.

Industry experts and auto executives share a common vision of the future: a road network teeming with electric vehicles. Shailesh Chandra, the managing director of Tata Motors, envisions Indian electric vehicles reaching a staggering one million units by 2030. Balbir Singh Dhillon, the Indian head of Audi, predicts that 50% of sales in India will come from the electric vehicle segment by the same year. Such projections indicate a colossal growth potential with an estimated compound annual growth rate (CAGR) of approximately 49% between 2022 and 2030.

The Rise of Mahindra and Mahindra in the EV Sector

Among the key players in the Indian electric vehicle market, Mahindra and Mahindra Group stands out with its ambitious plans and substantial investments. As a subsidiary of Mahindra and Mahindra, Mahindra Electric Automobile Limited (MEAL) has gained attention as a potential future spin-off company. In October 2022, Mahindra Group announced a significant investment of INR 10,000 crore in MEAL, attracting anchor investors such as British International Investment and Temasek.

The bullish sentiment towards Mahindra and Mahindra Stems from various factors. Firstly, Mahindra has established a strong market share in the Indian passenger vehicle segment, particularly in the booming SUV market. With SUV market share nearing 50% in July 2023, Mahindra's expertise in this segment positions them for continued growth.

Secondly, Mahindra has unveiled its inglo bond electric platform, paving the way for the launch of several exciting SUVs in the next two years. Partnering with Chinese companies BYD and Farasis for battery supply further strengthens Mahindra's position in the EV market.

Additionally, Mahindra's financial performance reflects its growth potential. With revenue, EBITDA, net income, and earnings per share consistently increasing, Mahindra proves its ability to thrive in the evolving landscape of the EV industry. The company's stable stock performance and discounted valuation compared to its peers make it an attractive investment opportunity.

Comparison of Mahindra and Mahindra with Tata Motors

While Mahindra and Mahindra's EV ventures display promising prospects, some may question the focus on this company over Tata Motors, which currently holds a dominant market share in the electric vehicle passenger segment. However, a closer examination reveals certain advantages that Mahindra and Mahindra possess.

Mahindra and Mahindra's stability and consistency in stock performance differentiate it from Tata Motors, which has experienced significant volatility over the years. The lower valuation of Mahindra and Mahindra with a more favorable price-to-earnings (P/E) ratio emphasizes its potential undervaluation, while Tata Motors trades at a higher P/E ratio. These factors contribute to the compelling case for Mahindra and Mahindra as a long-term bet in the EV sector.

Amaraja Batteries: Poised for Growth in the EV Market

As batteries stand at the Core of electric vehicles, investing in leading battery manufacturers is a prudent choice. Amaraja Batteries, the second-largest battery manufacturing company in India, showcases immense potential in the EV sector. With seven battery manufacturing plants and a substantial market share in various segments, Amaraja Batteries is a dominant force in the industry.

Amaraja Batteries' strategic decision to invest approximately INR 9,500 crore in a lithium-cell giga factory in Telangana demonstrates its commitment to catering to the growing EV market. With a phased development plan and the support of the Telangana government, Amaraja Batteries aims to become a key provider of lithium-Based batteries for electric vehicles.

The company's solid financial performance, low debt position, and attractive valuation with a relatively low P/E ratio make it an intriguing investment opportunity for those looking to capitalize on the growing EV market.

Samvardhana Motherson International Limited: A Promising EV Component Supplier

While EV manufacturers take the spotlight, the importance of component suppliers cannot be overlooked. Samvardhana Motherson International Limited (SMIL), led by the visionary Vivek Chand Sagal, operates as a prominent supplier of smaller vehicle components to major automotive companies. The company's four business divisions, including wiring harnesses, modules and polymer products, and vision systems, position it as a crucial player in the EV ecosystem.

SMIL's strong order book from EV original equipment manufacturers (OEMs) highlights its relevance in the growing EV market. With approximately 20% of booked business coming from EV OEMs, SMIL demonstrates a promising future.

Financially, SMIL exhibits stability and growth, with steadily increasing revenues and a robust acquisition strategy. While its stock experienced a dip amidst geopolitical tensions, the undervaluation compared to peers and the majority stake maintained by promoters add to its allure as a long-term investment opportunity.

Conclusion

The Indian electric vehicle market holds tremendous potential for investors and businesses alike. With a rapidly growing market share, ambitious plans from prominent companies like Mahindra and Mahindra, and the emergence of battery manufacturers and component suppliers, the future of the EV industry in India appears bright. By carefully analyzing and considering the performance and prospects of EV stocks such as Mahindra and Mahindra, Amaraja Batteries, and Samvardhana Motherson International Limited, investors can aim to capitalize on the electrifying growth of the Indian EV market.