List of Best Automobile Stocks in India 2024

The Indian automobile sector, one of the main pillars of the Indian economy, plays a pivotal role in shaping the economic landscape. From being one of the world’s largest markets for two-wheelers to witnessing rapid advancements in electric vehicles, the industry is a vibrant mix of legacy manufacturers and cutting-edge innovation. The sector continues to be a key driver of growth, employment, and technological progress in India.

In this blog, let’s look at the best automobile stocks in India and the reasons to invest in them.

Overview of the Indian Automobile Sector 

The Indian automobile industry is one of the most significant sectors in the country, contributing substantially to its GDP, employment, and industrial output. As of 2024, the Indian automobile sector contributes approximately 7.1% to India’s GDP. Additionally, the sector accounts for about 49% of the country’s manufacturing GDP. This substantial contribution underscores the sector’s critical role in driving economic growth, creating employment, and fostering technological innovation across the country.

India is the fourth-largest automobile manufacturer in the world and has emerged as a key player in the global automotive landscape. The industry is known for its wide range of products, including passenger vehicles, commercial vehicles, two-wheelers, three-wheelers, and, recently, electric vehicles (EVs). Here’s a detailed overview:

Key Features:

• Global Presence: India is one of the world’s largest manufacturers of automobiles, particularly in the two-wheeler and small-car segments. The country is also a significant exporter of vehicles and automotive components.
• Growth Driver: The industry has been a major contributor to economic growth, driven by rising income levels, increased urbanization, and favorable government policies.
• Technological Advancement: The industry is increasingly focusing on innovation, including the development of electric vehicles (EVs), connected vehicles, and advanced safety features.

Industry Structure

The Indian automobile sector is broadly divided into several key segments:

• Passenger Vehicles (PV): It includes hatchbacks, sedans, SUVs, and luxury cars.
• Commercial Vehicles (CV): It encompasses light commercial vehicles (LCVs), medium and heavy commercial vehicles (M&HCVs), and buses.
• Two-wheelers: It includes motorcycles, scooters, and mopeds.
• Three-wheelers: It includes auto-rickshaws and other small commercial three-wheelers.
• Electric Vehicles (EVs): A rapidly growing segment covering all types of electric-powered vehicles.

Top Automobile Stocks Based on Market Capitalization

The top Automobile stocks in 2024 are:

The automobile stocks have been listed in descending order based on their market capitalization in the table below:

Best Automobile Stocks in India Based on Market Capitalization – An Overview

Here is a brief overview of the top Indian Automobile stocks:

1. Tata Motors Ltd.

Tata Motors was established in 1945 with the aim of being a locomotive manufacturer. In 1954, the company entered into a joint venture with Daimler-Benz and set up a manufacturing facility for Daimler lorries. Today, Tata Motors is a leading global automobile manufacturer. The company is a part of the illustrious multinational conglomerate, the Tata Group. It offers a diverse portfolio of automobiles, including sports utility vehicles, trucks, buses, and defense vehicles. It has operations 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). Its subsidiaries include Jaguar Land Rover in the UK and Tata Daewoo in South Korea. The company’s headquarters is in Mumbai.

2. Maruti Suzuki India Ltd.

Maruti Suzuki was established in 1981 by the Government of India and was previously known as Maruti Udyog Ltd. as a joint venture with Suzuki Motor Corporation (SMC), Japan. Suzuki initially held a 26% stake. The Government of India reduced its stake and sold its stake to Suzuki Motor Corporation in 2007. It is the market leader in the passenger vehicle segment in India. In terms of production volume and sales, the company is now SMC’s largest subsidiary. Maruti Suzuki Ltd. is a market leader in passenger vehicles and sells approximately 42% of the total passenger vehicles sold in India. The company’s headquarters is located in New Delhi.

3. Mahindra & Mahindra Ltd.

The company was established in 1945 by Ghulam Mohammad and two Mahindra Brothers (KC & JC Mahindra) as a steel trading company. It was later renamed Mahindra & Mahindra in 1948. Today, Mahindra & Mahindra Ltd. is one of the most diversified automobile companies in India, with a presence across 2-wheelers, 3-wheelers, PVs, CVs, tractors, and earthmovers segments. Mahindra Tractors is a unit of M&M and is also the world’s largest manufacturer of tractors. The company’s headquarters is located in Mumbai.

4. Bajaj Auto Ltd.

Bajaj Auto, the flagship company of Bajaj Group, was established in 1945 as Bachraj Trading Corporation Ltd. During its early days, the company used to import and sell two and three-wheelers in India. In 1959, the company got a license from Piaggio to manufacture Vespa scooters. The company exports to 79 countries across the world. Its headquarters are located in Pune.  

5. Eicher Motors Ltd.

Eicher Motors Limited, incorporated in 1982, is the listed company of the Eicher Group in India. It is a major player in the Indian automobile industry and the global leader in middleweight motorcycles. It is the owner of the iconic Royal Enfield brand, which is focused on mid-sized motorcycles (250-750 cc). Classic, Bullet, and Himalayan are some of the brands owned by the company’s Royal Enfield brand. The automobiles manufactured by Eicher Motors are sold in more than 60 countries. The company entered a joint venture with Volvo Group to create Volvo Eicher Commercial Vehicles Limited (VECV). VECV is engaged in truck and bus operations, auto components business, and technical consulting services business. The company’s headquarters is located in New Delhi.

Top Automobile Stocks Based on One-Year Return

Best Automobile Stocks in India Based on One Year Return – An Overview

The best automobile stocks according to 1-Year return are given below, along with a brief overview:

Samvardhana Motherson International Ltd

Samvardhana Motherson International Ltd. was established in 1986 as a wiring harness manufacturer for Maruti Udyog. The company was a joint venture with the Sumitomo Group of Japan. The company primarily engages in the manufacture and sale of components to automobile manufacturers. The company is amongst the world’s largest manufacturers of exterior rear-view mirrors, has a dominant market share, and is a leading global player in polymer-based interior and exterior modules. Moreover, the group is also the largest manufacturer of wiring harnesses for passenger vehicles in India. The company’s headquarters is located in Noida.

TVS Motor Company Ltd.

TVS started its journey in 1911 when T.V. Sundaram Iyengar started a transportation business in Madurai. Today, TVS Motor Company Ltd (TVSM) is engaged in manufacturing two-wheelers and their accessories; it currently manufactures a wide range of two-wheelers and three-wheelers. TVSM is one of the leading players in the two-wheeler industry and is the only company to have a presence in all three categories, i.e., motorcycles, scooters, and mopeds, catering to both domestic and international markets. The company’s headquarters is located in Chennai.

Overviews of the remaining companies have been given above.

Key Performance Indicators (KPIs)

Benefits of Investing in Automobile Stocks

Here are some reasons to invest in Indian automobile stocks:

• Growing Domestic Market: Rising incomes and urbanization are boosting vehicle demand.
• EV Growth: Strong government support and early mover advantage in electric vehicles.
• Export Potential: Expanding global reach and competitiveness in international markets.
• Favorable Demographics: A young population and first-time buyers driving market growth.
• Economic Recovery: Post-pandemic rebound and infrastructure development fueling demand.
• Innovation: Investment in R&D and new product launches enhances the competitiveness and quality of automobiles.
• Long-Term Growth: Low vehicle penetration indicates significant future growth potential.

Factors to consider while investing in Automobile Stocks

Here’s a summary of the key factors to consider before investing in the Indian automobile stocks:

• Market Trends: Monitor shifts in consumer preferences, demand for electric vehicles (EVs), and urban vs. rural market dynamics.
• Government Policies: Investors must remain informed regarding regulations on emissions, EV incentives, and tax changes that could impact the profitability of the companies.
• Technological Innovation: Investors should look for companies leading innovation in EVs, automation, and connected vehicles.
• Economic Factors: Evaluate the impact of interest rates, fuel prices, and overall economic growth on vehicle demand.
• Supply Chain Strength: Assess the company’s ability to manage raw material costs and navigate challenges like semiconductor shortages.
• Competitive Positioning: Look at market share, innovation, and the potential impact of new entrants in the industry.
• Global Exposure: Factor in export opportunities, global economic conditions, and international partnerships.
• Financial Health: Review the company’s financial statements thoroughly before investing.
• Sustainability and ESG: Prioritize companies focusing on sustainable practices and good governance.

Future of the Automobile Industry

Investing in automobile stocks requires considering both their current market positions and future growth potential, especially with the industry’s shift towards electric and sustainable mobility. The following themes would define the future of the automobile industry:

• Electric Vehicles (EVs): The shift towards electric mobility is one of the most significant trends in the Indian automobile sector. Companies that are early movers in this space, like Tata Motors and M&M, are likely to benefit.
• Rural Demand: Companies with a strong rural presence, like Hero MotoCorp and Mahindra & Mahindra, are well-positioned to capitalize on the growing demand from these areas.
• Premiumization: There is a growing trend towards premium vehicles, particularly in the two-wheeler segment, benefiting companies like Eicher Motors and Bajaj Auto.

Conclusion

The Indian automobile industry is poised for significant growth, driven by a combination of rising incomes, urbanization, favorable government policies, and technological advancements. The shift towards electric vehicles, the growing export market, and changing consumer preferences are shaping the future of the industry. As India continues to develop, the automobile sector is expected to play a crucial role in the country’s economic landscape, offering numerous opportunities for investors, manufacturers, and consumers alike. Understanding the key aspects of the industry will help investors identify opportunities and manage risks effectively, ensuring well-informed investment decisions in this rapidly evolving industry. Moreover, an individual can consult a financial advisor before investing.

Frequently Asked Questions (FAQs)