We covered a trending theme last month – artificial intelligence stocks in India. Another trending theme to invest in India is Electric Vehicle (EV). India is the third largest auto market in the world, and the country is pushing its EV adoption – more EV cars on the road. How can investors benefit from this? The idea is simple – investors can buy the best long term stocks in the EV space and benefit from the overall industry growth. In this article, we understand the best EV stocks in India, why investors should invest in them, and the names of the top EV companies.
Categories within the EV Sector
EV companies not only consist of companies that manufacture electric vehicles – there are numerous interconnected components. Let us look at different categories within this sector to help you pick a stock from each category:
- Manufacturing: These are companies that manufacture EV cars, 2-wheelers, buses, tractors, etc
- Battery Producers: Most car manufacturers are not manufacturing EV batteries in-house, and there is a different sub-sector for this. These companies develop and produce electricity storage solutions, supplying batteries for electric vehicles and renewable energy systems.
- EV Components: Companies working on manufacturing EV software are key for developing software for battery management, energy efficiency, and connectivity.
- Charging infrastructure: EV cars need charging stations, networks, and technology to support charging. Companies working in this space will definitely do well.
Why you should invest in EV stocks?
There are many reasons why you may consider investing in top ev stocks in India. Here are the top five reasons:
Favorable government policies: The Indian government continues to handhold the EV industry. It means that the industry will grow from the current levels, supported by the government. For example, the higher allocation to two crucial Production Linked Incentive (PLI) schemes related to auto components and batteries and the exemption of customs duties on critical minerals will help make electric vehicles affordable in India.
Growth Industry: India aims to have 30% EV penetration by the end of this decade (2030), and the government is supporting the growth through policy change. At the start of 2024, the EV penetration was around 6%. It was less than a percent before the pandemic. Investors looking for growth stocks should have stocks from the EV sector – it is definitely a growth industry.
Higher Returns: If you are ready to take higher risk, you can invest in small and mid-cap companies from this sector and expect higher returns – better than the benchmark.
Technology Advancement: The EV industry is relatively new, and there is a potential for continuous advancements in different areas like battery technology, autonomous driving, and software integration. Companies in this sector are focused on developing cutting-edge technologies. If any company cracks the next big thing in this space, it can lead to significant market opportunities.
Environment benefits: EVs produce zero tailpipe emissions. It reduces greenhouse gas emissions compared to traditional internal combustion engine (ICE) vehicles. By supporting EV companies, you can help battle climate change and reduce air pollution, contributing to a cleaner environment.
Best EV stocks in India 2024
Here are the top 5 EV stocks (in no order):
Tata Motors: The company is a leading player in the Indian EV market and is aggressively expanding its electric vehicle lineup. Tata Motors’ growth is driven by its two flagship EV cars – Punch and Nexon. They are ranked first, holding 40% and 28% market share, respectively. Recently, the company announced that it will launch multiple electric cars under the Avinya brand. In FY24, the company saw a growth of 91% for its electric vehicle division.
Exide Industries: Exide is a major player in the battery manufacturing industry. They supply batteries for various applications, including automotive. In recent years, they have increased focus on developing advanced lithium-ion (Li) batteries for the electric vehicle market. They plan to become a key supplier of batteries to car manufacturers in the coming years.
Himadri Speciality Chemical: They primarily focus on specialty chemicals and are not directly involved in EV manufacturing. However, some of the chemicals they produce have applications in the EV value chain, such as battery components or other EV parts.
JBM Auto: It is a significant player in the automotive components industry, with a growing focus on electric vehicles. The company offers various EV components, including electric buses, battery packs, and charging stations. As per experts, it has a strong growth prospectus.
Hindustan Copper: The company is involved in copper mining and production. You must know that copper is a critical component in electric vehicles, especially for wiring and motors. The growing EV market could increase demand for copper, benefiting Hindustan Copper.
| Company Name | Sub-Sector | Market Cap (Crore) | Stock Price* |
| Tata Motors Ltd | Passenger Vehicles & Commercial Vehicles | 4,02,591 | 1,096.65 |
| Exide Industries Ltd | Batteries | 43,252 | 508.85 |
| Himadri Speciality Chemical Ltd | Specialty Chemicals | 23,059 | 467.25 |
| Hindustan Copper Ltd | Mining – Copper | 29,992 | 310.15 |
| JBM Auto Ltd | Auto Components | 23,023 | 1947.1 |
How to choose EV stocks in India?
To select EV stocks for long term for your portfolio, here are a few things you can do:
- Diversify: Above, we have discussed different sub-sectors. As an investor, you should invest in stocks from different sub-categories. It will ensure that your risk is reduced. Also, be sure to add companies from small, mid, and large-cap space to your portfolio.
- Fundamentally strong stocks: Many companies are working in this space, and not all are good. You need to find the industry leader from each sub-category and invest in them.
- Valuations: Everyone knows that EV companies will do well. Therefore, most EV stocks have already given an excellent run-up. Do not jump to a company – you have to consider valuations. If current valuations seem high, you can stagger your investment over a year to average out the cost.
Now, if analysis and market study are something you are uncomfortable doing, use artificial intelligence to create a diversified equity portfolio. Alternatively, go with the best stock market advisor in India, but don’t risk your money, as without knowledge, the stock market is a gamble.