1 week Ago
The is widely tracked, with millions of vehicles including trucks, buses, cars, three-wheelers, scooters and bikes sold every year. India is the world’s second-largest manufacturer of two-wheelers, third-largest manufacturer of passenger cars, and largest manufacturer of three-wheelers. The industry has dozens of original equipment manufacturers, hundreds of auto component suppliers, and thousands of dealerships that eventually sell the products to the end customers.
While India's automotive landscape has long been dominated by homegrown giants, the influx of foreign automakers and the are reshaping the market at an unprecedented pace. Also read | The auto industry is undergoing a transformation, with a growing focus on less-polluting vehicles, including hybrids and electric vehicles. Despite the optimism around this transformation, the road ahead isn't without bumps.
Several auto stocks that were once soaring have seen their prices plummet by as much as 50% from their 52-week highs. These drops could present unique investment opportunities for savvy investors. We have filtered these stocks based on their fundamentals and the recent corrections in their stock prices.
Let’s take a closer look. #1 Ola Electric Mobility Ola Electric Mobility is a leading EV manufacturer in India, specialising in the vertical integration of technology and manufacturing for EVs and their components, including battery cells. Its operations are centered around the Ola Future factory, which produces EVs and critical components such as battery packs, motors and vehicle frames.
The company maintains a direct-to-customer distribution network with more than 750 “experience centers" across India – the largest such company-owned network – and a robust online presence. Ola Electric saw sales increase 39.1% year-on-year to 1,210 crore, in Q2FY25.
Gross margin for the auto segment was 20.6%, up 12 basis points from Q2FY24. At the operating level, the company reported a loss of 380 crore.
The net loss for the quarter was 490 crore. The company saw competition increase in the auto industry during the quarter, but management said it remained confident of its position. Here’s how the stock has performed over the past year.
After hitting a high of 146.4 on 19 August, it is currently trading at 85.2, down 41%.
The company is working aggressively to expand its distribution and service network to strengthen its market position. As part of its strategy, it aims to have 2,000 company-owned outlets. It currently operates 1,000 network partner stores, which it plans to increase by March.
This extensive network gives Ola access to tier-2 and tier-3 towns. The company is also looking to launch a series of new products to diversify its portfolio. Over the next two years, Ola plans to roll out over 20 new vehicles, including scooters, motorcycles, and three-wheelers.
The much-anticipated Roadster motorcycle series is set to be launched in phases starting March. #2 Tata Motors Tata Motors produced a wide range of vehicles including passenger cars, commercial vehicles, utility vehicles, electric vehicles, and defence vehicles. It operates in India, the UK, South Korea, South Africa, China, Brazil, Austria and Slovakia through a strong global network of subsidiaries, associate companies and joint ventures (JVs), including Jaguar Land Rover in the UK and Tata Daewoo in South Korea.
Tata Motors saw revenue decline by 3.5% to 1 trillion during Q2FY25. Operating profit fell 12% year-on-year to 12,160 crore.
The operating profit margin fell to 12% from 13% in Q2FY24. During Q2FY25, the company reported an 11% year-on-year decrease in consolidated net profit to 3,450 crore from 3,830 crore in the same period last year. This decline reflects challenges in both the domestic and international markets.
Here’s how its stock has performed over the past year. It hit a high of 1,161.8 on 30 July and is currently trading at 739.
2, down 36%. After a challenging Q2FY25,Tata Motors has targeted strategiesto drive recovery and growth. The company remains committed to becoming net-debt-freeand enhancing profitability across divisions.
It is prioritising the EV market, planning to mainstream EVs with a broader portfolio and a stronger ecosystem to capture significant market share. Also read: As supply constraints ease and demand rises in the latter half of FY25, Tata Motors remains vigilant about global market conditions, especially in China and Europe. By balancing growth initiatives with careful resource management, it is positioned to address immediate challenges while setting the stage for sustained, long-term growth.
#3 Hero MotoCorp Hero MotoCorp has been the world’s largest two-wheeler company, in terms of units sold in a calendar year, for more than two decades. It owns well-known bike brands such as Splendor, Passion, Glamour and scooter brands such as Pleasure and Maestro. The company reported its highest-ever quarterly revenue of 10,480 crore in Q2FY25, up 10% year-on-year.
It also achieved its highest-ever festival sales of 1.6 million units during the quarter. Operating profit for the quarter stood at 1,450 crore, up 7% year-on-year, while the operating profit margin remained flat at 14%.
Net profit increased by 6% year-on-year to 1,070 crore during the quarter while net margin fell to 10.2% from 10.6% in Q2FY24.
Here’s how the stock has performed over the past 12 months. It hit a high of 6,190.5 on 23 September and is currently trading at 4,183, down 32%.
The company aims to expand its EV portfolio with new products in the mid and mass segments. It plans to leverage on its tie-ups with Harley Davidson and American EV maker Zero Motorcycles, and scale up its global business. The company currently operates in 50 markets.
Management remains optimistic about India’s economic trajectory and the auto sector's outlook. It expects the positive demand trends to continue after the festive season, driven by both rural and urban segments. It is also in the process of upgrading its showrooms to give its premium customers a superior experience.
#4 Bajaj Auto Bajaj Auto is a two-wheeler and three-wheeler manufacturing company that exports to 79 countries. Headquartered in Pune, it is the world's third-largest manufacturer of motorcycles and the second-largest in India. It is also the world's largest three-wheeler maker.
Bajaj Auto runs three manufacturing plants across India with an annual capacity of 5 million units. Sales for Q2FY25 came in at 13,250 crore, up 22.3% year-on-year.
Operating profit fell by 3% year-on-year to 2,070 crore, while the operating profit margin dropped to 16% from 20% in Q2FY24. It posted a net profit of 1,380 crore for the quarter, a 24% decrease from 2,020 bn in the same quarter last year. Here’s how its stock has fared over the past year.
After hitting a high of 12,666.4 on 27 September, it is now trading at 8,813.6, down 30%.
Bajaj Auto is looking to position itself for sustained growth in the coming quarters. It is focused onexpanding its EV offeringsand enhancing its product lineup as it looks to address the growing demand for sustainable mobility. Also read: The EV portfolio has already gained traction, contributing to 20% of domestic revenue.
This trend is expected to continue as it introduces new models. The company is also enhancing its export strategy, particularly in Latin America, where it has reported robust growth. Continued investments in manufacturing facilities will support these expansion plans, with the aim of increasing production capacity significantly by FY26.
While the recent earnings call highlighted some challenges, the company remains optimistic about its trajectory. Product launches and expansion into new markets are expected to drive revenue growth. #5 Maruti Suzuki India Maruti Suzuki, a subsidiary of Suzuki Motor Corporation, Japan, is India's largest passenger vehicle company in terms of production and sales.
It offers a wide range of vehicles, from hatchbacks to compact SUVs and premium sedans, but is best-known for making affordable, fuel-efficient vehicles. Over the past few decades, the company has expanded its operations beyond India and now exports its vehicles to several countries including Nepal, Bangladesh, Bhutan, Africa, Egypt, Europe and Australia. Sales increased 0.
3% year-on-year to 37,450 bn in Q2FY25. Operating profit for the quarter stood at 4,990 crore, while operating profit margin stood at 13%, down from 14% in Q2FY24. Net profit for the quarter declined 18% year-on-year to 3,100 core, while the net profit margin declined to 8.
3% from 10.1% in Q2FY24. Here’s how its stock has performed over the past 12 months.
After hitting a high of 13,495.6 on 27 September 2024, it is currently trading at 12,018.2, down 11%.
Maruti Suzuki has ambitious growth plans and is looking to expand its production capacity. It recently commissioned a new assembly line, increasing its Manesar facility's capacity to 900,000 units a year to meet the growing demand for its vehicles. Also read | The company is also targeting sustainability with its use of renewable energy.
Maruti plans to increase its solar power capacity to 78.2 MWp (megawatt peak) by FY25. It is also optimistic about biofuels and has started operating a biogas plant at its Manesar facility.
Demand for in India continues to rise. One out of every three cars Maruti sells in the country is a CNG model. This growing demand positions the company to capture a significant share of the market for fuel-efficient and eco-friendly vehicles.
Conclusion The Indian auto industry offers investors several opportunities to build their portfolios and benefit from the sector’s growth. However, just like in any other sector, one should thoroughly assess the performance and potential of the auto companies before investing in them. Investors should take into account industry trends, financial performance, regulations and valuations before making any decisions.
It’s important to note that any significant change in rules governing the auto sector could affect these stocks. These rules could be related to pollution, safety features, fuel and so on. Given all these risks, investors must be cautious.
While the potential rewards are high, it's essential to conduct thorough research before jumping in. Happy investing!.
