Why invest in the best automobile stocks? Investing in auto sector stocks is an appealing option for investors seeking security and growth prospects. These companies present a good opportunity for investors looking to profit from a significant portion of global commerce due to the industry’s resilience to economic swings and the ongoing need for transport solutions.
Here is a detailed overview of the best automobile stocks to buy in 2024.
What are Automobile Stocks?
Automobile stocks are shares of publicly listed companies that distribute, manufacture, or sell automobiles and their related parts. India ranks fourth globally in automobile volume sales after China, the United States, and Japan.
Top 10 Automobile Stocks to Invest in 2024
Here is a comprehensive compilation of the most promising stocks to invest in 2024.
- Maruti Suzuki India Ltd
- Tata Motors
- Mahindra & Mahindra
- Hero MotoCorp
- Eicher Motors
- Bajaj Auto
- Ashok Leyland
- Samvardhana Motherson
- Bosch Ltd
- Sona BLW Precision Forgings
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Overview of Best Automobile Stocks to Invest in India
Maruti Suzuki India Ltd
India’s largest passenger car manufacturer, Maruti Suzuki India Limited (MSIL), is a Suzuki Motor Corporation, Japan division. The country’s automotive revolution is said to have been started by Maruti Suzuki. The company has a strong debt-free balance sheet, with a pre-tax margin of 9% and a good return on equity (ROE) of 13%. This ensures steady profit growth independent of economic cycles.
Tata Motors
Tata Motors is a well-known producer of automobiles, buses, tractors, and trucks. The company’s pre-tax margin is 1%, indicating possible room for improvement. Given its high debt-to-equity ratio of 196% and reasonable 5% return on equity, Tata Motors provides investors with opportunities and challenges. Revenue and profits growth for Tata Motors are anticipated to increase by 7.5% and 18.4% per year, respectively. An annual growth of 1.8% is expected for EPS; in three years, a 27.8% return on equity is anticipated.
Mahindra & Mahindra
The Mahindra Group’s primary business, Mahindra & Mahindra Ltd. (M&M), produces mobility products and agriculture solutions. The company’s financial strength is demonstrated by its excellent ROE of 18% and solid pre-tax margin of 10%. The yearly income increased by 34%, indicating strong financial success.
Hero MotoCorp
The largest two-wheeler manufacturer in the world, Hero MotoCorp, reported operational revenue of Rs. 34,936.69 Cr, growing 15% annually. The company continues to be debt-free while exhibiting impressive yearly sales growth of 15%, a robust pre-tax margin of 11%, and an impressive return on equity of 16%.
Eicher Motors
Eicher is the parent company of Royal Enfield and an industry leader in the mid-sized motorcycle market for engines ranging from 350cc to 650cc. Revenue and profit growth for Eicher Motors are predicted to increase by 11.1% and 12.3% per year, respectively. EPS is projected to increase by 12.5% annually, and in three years, the return on equity will be 22.3%.
Bajaj Auto
Due to Bajaj Auto Ltd.’s dominance as India’s top motorcycle exporter, two of every three motorcycles bearing the renowned Bajaj label are being sold in foreign markets. It also produces the most significant number of three-wheelers globally, meeting various transportation requirements. Forecasted revenue growth for BAJAJ-AUTO is 12.2% annually, outpacing the 10.5% annual growth for the Indian market.
Ashok Leyland
Located in Chennai, Ashok Leyland is a global automobile manufacturing company based in India. The Hinduja Group is the current owner of it. The corporation is considered low risk based on its ESG score of 14.60.
Samvardhana Motherson
With its headquarters in Noida, Samvardhana Motherson International Ltd. is an international manufacturer of automobile components in India. It produces plastic parts, rear-view mirrors and wire harnesses for passenger cars. With a balanced debt-to-equity ratio of 29%, the firm is a steady competitor in the market, even with a small pre-tax profit of 3% and a reasonable 6% return on equity.
Bosch Ltd
Bosch is a prominent supplier of services and technology in the domains of consumer goods, energy and building technology, industrial technology, and mobility solutions. The largest Bosch development centre outside of Germany is located in India and offers end-to-end technological and engineering solutions.
Sona BLW Precision Forgings
In addition to producing conventional and micro-hybrid starter motors and EV traction motors for use in automobiles and other applications, Sona BLW Precision Forgings also designs, manufactures, and supplies precisely forged bevel gears and differential case assemblies. The company is expected to see annual growth in earnings and sales of 26.8% and 23.5%, respectively.
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Latest Performance of Top 10 Automobile Stocks
| Company Name | Mar Cap Rs.Cr. | ROCE % | CMP / BV | Debt/ Eq
% |
ROE % | P/E | Div Yld % |
| Maruti Suzuki India Ltd | 3,62,794 | 14.5 | 11,536 | 0.6 | 11.5 | 29.8 | 0.77 |
| Tata Motors | 3,42,923 | 5.95 | 937 | 2.78 | 5.62 | 17.0 | 0.21 |
| Mahindra & Mahindra | 2,40,026 | 12.7 | 1,930 | 140.4 | 18.1 | 21.6 | 0.84 |
| Hero MotoCorp | 90,335 | 22.7 | 4,519 | 0.02 | 16.7 | 24.3 | 2.21 |
| Eicher Motors | 1,07,435 | 27.4 | 3,927 | 2.6 | 21.1 | 28.0 | 0.94 |
| Bajaj Auto | 2,38,530 | 26.2 | 8,437 | 0.00 | 20.2 | 32.2 | 1.66 |
| Ashok Leyland | 51,074 | 11.4 | 174 | 306.5 | 15.0 | 21.6 | 1.49 |
| Samvardhana Motherson | 78,099 | 8.76 | 116 | 89 | 7.16 | 48.6 | 0.56 |
| Bosch Ltd | 83,341 | 17.4 | 28,280 | 0.0015 | 13.2 | 49.5 | 1.70 |
| Sona BLW Precision Forgings | 38,054 | 22.0 | 649 | 15.5 | 18.3 | 76.5 | 0.45 |
*Note=Stocks data may change; users advised to use live data before making decisions.
Overview of the Automobile Industry in Indian Market
India stands as the third largest automobile market globally. In India, the automobile industry makes up approximately 50% of the manufacturing GDP, 26% of the industry GDP, and 7.1% overall. The automobile industry pays about 15% of all taxes collected in the nation, directly and indirectly employing 3.2 crore people.
Advantages and Risks Associated with Investing in Automobile Stocks
If you want to diversify your portfolio as well as make money in this dynamic market, investing in automobile stocks has the following benefits:
Exposure to long-term growth powered by the global demand for automobiles can be obtained by investing in widely recognised automobile companies.
Automobile manufacturers are appealing to income investors since many of them pay dividends to their stockholders.
As the industry advances, it might be profitable to invest in businesses that are leading revolutionary changes.
Prominent automakers operate and sell their vehicles across several nations, exhibiting a worldwide reach, which may lower the risk caused by regional economic swings.
Investment risks in automobile stocks include Market Cyclicity, regulatory changes, competition and supply chain disruptions.
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Why Should You Invest in Automobile Stocks in India?
Automobile sector stocks are expected to increase at a compound annual growth rate (CAGR) of 10% over the next five years, providing substantial investment gains. Certain important policies in place are giving the automotive sector a competitive advantage in the future:
The production Linked Incentive(PLI) scheme
This scheme intends to improve the automobile industry by incentivising manufacturers.
The National Electric Mobility Plan (NEMP)
This scheme focuses on marketing electric cars (EVs). With the globe transitioning towards greener choices, companies investing in EVs may experience increased demand, leading to solid stock performance.
The National Auto Policy
This policy serves as a road map for the automotive sector, directing it towards growth and innovation. When businesses follow this approach, it may lead to stronger strategies, goods, and, you guessed it, stock performance.
How to Start Investing in Automobile Stocks?
SMC, your dedicated ally in navigating the complexities of the financial realm, transforms your investment journey into an enriching experience within the Automobile stocks domain.
Here are three easy steps to start investing in Automobile stocks :
- Go to the official website of SMCtradeonline or simply download the SMC ACE app
- Open a free demat account
- Start investing
WHY SMC
- 20 Lac+ unique clients
- 33+ Years of Serving
- Advance Technical Analysis
- Free Demat Account
Conclusion
India’s strong and growing middle class has made the two-wheeler category the country’s largest vehicle market in terms of volume. The automobile industry stocks in India provide a promising future. Still, it is important to examine the top automobile stocks in India right now and select the one that most closely matches your portfolio circumstances and financial objectives to avoid making bad decisions.
Author: All Content is verified by SMC Global Securities.
