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Top Automobile Stocks in India To Watch Out for in 2023 – Poonit Rathore

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Top Automobile Stocks in India To Watch Out for in 2023 - Poonit Rathore
Top Automobile Stocks in India To Watch Out for in 2023 – Poonit Rathore

Top Automobile Stocks in India: The Indian automobile industry is poised for a resurgence, with experts forecasting a surge in sales due to decreasing unemployment, increasing incomes, and a burgeoning demand for credit. As investors eagerly anticipate the potential for substantial returns, we highlight the premier automobile stocks in India for 2023 that are worth keeping an eye on.

It’s difficult to predict which specific automobile stocks in India will perform the best in 2023 as the stock market can be unpredictable and subject to various external factors. However, some top automobile companies in India that may be worth watching include –

Maruti Suzuki India Limited is the largest car manufacturer in India, known for its popular models such as the Alto and Swift. The company has a wide range of vehicles, including hatchbacks, sedans, SUVs, and vans. The company has a strong presence in the Indian market, with a large network of dealerships and service centers across the country. Maruti Suzuki has consistently been a profitable company and has a strong brand reputation in India. The company has a joint venture with Suzuki Motor Corporation of Japan, which allows it to access new technology and manufacturing techniques. However, it’s important to keep in mind that the company’s financial performance may be affected by changes in the Indian economy and the automobile industry.

Tata Motors Limited is a multinational automotive manufacturing company that produces a wide range of vehicles, including passenger cars, trucks, and buses. The company was established in 1945 and is headquartered in Mumbai, India. Tata Motors is the largest manufacturer of commercial vehicles in India and one of the leading manufacturers of passenger vehicles. The company has a strong presence in the Indian market and exports its vehicles to several countries worldwide.

Tata Motors has a wide range of passenger cars, including hatchbacks, sedans, and SUVs. Some of the company’s popular passenger car models include the Tata Nano, Tata Tiago, Tata Tigor, Tata Altroz, Tata Nexon, Tata Harrier, and Tata Safari. The company also produces a wide range of commercial vehicles, including trucks, buses, and construction equipment. The company’s commercial vehicles are known for their durability and fuel efficiency.

Tata Motors has several joint ventures and strategic partnerships with leading global automotive companies, which allows it to access new technology and manufacturing techniques. The company has research and development centers in India, the UK, and South Africa, and is working on developing electric and hybrid vehicles.

Mahindra & Mahindra Limited is an Indian multinational automotive manufacturing corporation and one of the largest vehicle manufacturers by production in India. The company was established in 1945 and is headquartered in Mumbai, India. Mahindra & Mahindra is known for its strong presence in the Indian market and is one of the largest manufacturers of tractors in the world.

The company has a wide range of vehicles, including passenger cars, commercial vehicles, and two-wheelers. Some of the company’s popular passenger car models include the Mahindra XUV300, Mahindra Thar, Mahindra Scorpio, Mahindra XUV500, Mahindra Bolero, and Mahindra Verito. The company also produces a wide range of commercial vehicles, including trucks, buses, and construction equipment.

Mahindra & Mahindra is also a leading manufacturer of tractors in the world, under the brand name Mahindra Tractors. The company has a strong presence in the global tractor market and exports its tractors to several countries worldwide. In addition to this, the company also has a presence in the farming equipment and construction equipment industries.

Mahindra & Mahindra has several joint ventures and strategic partnerships with leading global automotive and non-automotive companies, which allows it to access new technology and manufacturing techniques. The company has research and development centers in India, the US, and Italy, and is working on developing electric and hybrid vehicles.

Bajaj Auto Limited is one of the largest two-wheeler manufacturers in India and the world’s largest three-wheeler manufacturer. The company was established in 1926 and is headquartered in Pune, India. Bajaj Auto has a wide range of two-wheelers, including motorcycles, scooters, and three-wheelers. The company has a strong presence in the Indian market and exports its vehicles to several countries worldwide.

The company’s popular two-wheeler models include the Bajaj Pulsar, Bajaj Dominar, Bajaj Avenger, Bajaj Platina, Bajaj CT100, and Bajaj Chetak. Bajaj Auto also produces a wide range of three-wheelers, including commercial and passenger vehicles. Bajaj Auto’s three-wheelers are known for their durability, fuel efficiency, and low maintenance costs.

Bajaj Auto has several joint ventures and strategic partnerships with leading global automotive companies, which allows it to access new technology and manufacturing techniques. The company has research and development centers in India and is working on developing electric and hybrid vehicles.

Eicher Motors Limited is a leading Indian automotive company that manufactures commercial vehicles and motorcycles under the Eicher brand and luxury motorcycles under the Royal Enfield brand. The company was established in 1948 and is headquartered in Gurgaon, India. Eicher Motors is known for its strong presence in the Indian market and exports its vehicles to several countries worldwide.

The company’s popular commercial vehicle models include the Eicher Pro series of trucks and buses and the Eicher Skyline Pro series of buses. Eicher Motors is known for its range of reliable and fuel-efficient commercial vehicles that are well-suited for Indian road conditions. The company also manufactures motorcycles under the Royal Enfield brand, which is known for its iconic design and retro style. Some of the popular models include the Royal Enfield Classic, Royal Enfield Bullet, Royal Enfield Himalayan, Royal Enfield Interceptor, and Royal Enfield Continental GT.

Eicher Motors has several joint ventures and strategic partnerships with leading global automotive companies, which allows it to access new technology and manufacturing techniques. The company has research and development centers in India and is working on developing electric and hybrid vehicles.

But before we rush to the list itself, let us give some space to briefly acquaint ourselves with the automobile industry landscape in India.

Indian Automobile Industry Overview

Over the previous five years, the automotive sector has been on degrowth across all segments. The data below from the Society of Indian Automobile Manufacturers highlights the grim unit sales in the last few years.

(figures in lakhs) 

Category2017-182018-192019-202020-212021-22
Passenger Vehicles (PV)40.2040.2834.2530.6236.51
PV – YoY Growth / Degrowth(%)5.75%0.20%-14.99%-10.58%19.22%
Commercial Vehicles (CV)8.9511.127.576.258.06
CV – YoY Growth / Degrowth(%)10.51%24.23%-31.97%-17.42%28.90%
Three Wheelers (3-W)10.2212.6911.336.157.58
3-W – YoY Growth / Degrowth(%)30.43%24.13%-10.71%-45.75%23.34%
Two Wheelers (2-W)231.55245.00210.33183.50177.15
2-W – YoY Growth / Degrowth(%)16.16%5.81%-14.15%-12.76%-3.46%

However, there are green glimmers visible as the sales of PV, CV and 3-wheelers registered an increase of 19.22%, 28.90%, and 23.34% respectively in the financial year 2021-22. In the coming years, rising disposable incomes, better monsoons, easing inflation, stable fuel prices, and commodity cost decline will bring growth to the Indian automobile sector.

Top Automobile Stocks in India 2023

Let us now move forward to know the top automobile stocks in India in 2023.

Top Automobile Stocks in India #1 – Maruti Suzuki India

Top Automobile Stocks - Maruti Suzuki logo
CMP₹8,305.0Market Cap (Cr.)₹250,000
EPS₹201Stock P/E41.4
RoCE8.95%RoE7.25%
Face Value₹5.0Book Value₹1,893
Promoter Holding56.4%Price to Book Value4.39
Debt to Equity0.01Dividend Yield0.73%
Net Profit Margin4.43%Operating Profit Margin6.51%

Maruti Suzuki India Ltd. (MSIL) was incorporated in 1981 as Maruti Udyog by the Government of India. Suzuki Motor Corporation(SMC) then was a minor partner initially supplying cars that were sold in the country. Over the years SMC raised its stake taking its ownership to a majority of 56.4% by 2013.

Maruti has become the largest passenger car manufacturer in India with a combined production capacity of around 2.25 million units every year. It sold 1.65 million units in FY22. Its market share stood at 41.30% in November 2022.

Its product portfolio includes top-selling names such as Baleno, Ignis, Ciaz, WagonR, Dzire, Swift, and more. 

The company exports its cars to over 100 countries across the globe. Dzire, Baleno, and Swift were its top three export models in the recent fiscal year. 

It has earmarked a huge investment of Rs 10,400 crore towards the production of EVs and batteries. This is in line with its plans to roll out electric vehicles in India by 2025.

MSIL is a debt-free stock with a consistent dividend payout of over 30% for the last six years. It reported profits of Rs 3,880 crore on sales of Rs 88,330 crore in FY22. 

Top Automobile Stocks in India #2 – Mahindra & Mahindra

Top Automobile Stocks - Mahindra and Mahindra Logo
CMP₹1,234Market Cap (Cr.)₹155,000
EPS₹74Stock P/E18.4
RoCE11%RoE14.2%
Face Value₹5.0Book Value₹406
Promoter Holding19.4%Price to Book Value3.04
Debt to Equity1.65Dividend Yield0.94%
Net Profit Margin7.69%Operating Profit Margin16.30%

Part of Anand Mahindra-led Mahindra Group, Mahindra & Mahindra Ltd. (M&M) is one of the largest vehicle manufacturers in India. It produces a broad range of automobiles including passenger cars (SUVs), light, medium & heavy commercial vehicles, farm equipment, buses, and more.

Scorpio, XUV 700, Thar, Bolero, Blazo, Cruzio, Alfa, and Treo are some of the top brands of this automobile company.

It was founded in 1945 as Mahindra & Mohammed but was renamed later to Mahindra & Mahindra when M.G. Muhammad, one of the founders left the company to move to Pakistan. It was set up as a steel trading company but slowly ventured into vehicle assembly and manufacturing. It eventually started producing LCVs and farm tractors. 

Its 20 manufacturing plants generated a sales volume of 455,570 automobile units and 354,698 farm equipment units in FY22. The image below highlights the pan-India manufacturing operations of M&M. 

Mahinda and Mahindra Annual Report
Source: Mahindra & Mahindra Ltd. Annual Report FY22

In addition to producing vehicles, M&M is also engaged in the business of vehicle financing through its subsidiary Mahindra & Mahindra Financial Services. Lately, it has also forayed into other product types such as personal loans, home loans, insurance, etc.

Furthermore, M&M has a presence in hospitality, infrastructure, retail, logistics, steel trading & processing, IT businesses, and various other industries through its various subsidiaries.

Top Automobile Stocks in India #3 – Tata Motors

Top Automobile Stocks - Tata Motors
CMP₹394Market Cap (Cr.)₹140,000
EPS-₹22.19Stock P/E-15.4
RoCE1.4%RoE22.3%
Face Value₹2.0Book Value₹78.8
Promoter Holding46.4%Price to Book Value5
Debt to Equity5.52Dividend Yield0.00%
Net Profit Margin-4%Operating Profit Margin8.8%

Part of the salt to software conglomerate the Tata Group, Tata Motors (TaMo) is a leading automobile manufacturer with an international footprint. It has a presence across the whole product spectrum with its range of cars, premium cars, SUVs, buses, trucks, and defense vehicles.

TaMo was founded in 1945 and initially manufactured locomotives and other engineering products. Slowly it forayed into manufacturing commercial vehicles, passenger cars, and more. 

Over the years, Tata’s automobile arm has grown organically and inorganically as well, acquiring UK-based Jaguar & Land Rover and South Korean truck company Daewoo.

However, it has not been a smooth journey for Tata’s auto arm. It ran into heavy losses from FY19 on account of overpriced acquisitions and declining market share. It is only recently in FY21 and FY22 it has been able to control commodity cost inflation and declining market share.

Tata Motors Ltd. Revenue Segments

Tata Motors Revenue Segments
Source: Tata Motors Ltd. Annual Report FY22

As part of its recent divestment plans, the board of Tata Motors is considering the public listing of Tata Technologies, a subsidiary. Tata Tech. provides technology solutions in automobile, industrial machinery, aerospace, and adjacent engineering and manufacturing segments.

Top Automobile Stocks in India #4 – Bajaj Auto

Bajaj Auto Logo
CMP₹3,591Market Cap (Cr.)₹105,000
EPS₹202Stock P/E18.6
RoCE23.4%RoE19.0%
Face Value₹10.0Book Value₹900
Promoter Holding54.8%Price to Book Value3.99
Debt to Equity0.0Dividend Yield3.90%
Net Profit Margin16.4%Operating Profit Margin15.9%

Bajaj Auto was founded in the mid-1940s by Jamnalal Bajaj. The company initially imported and sold 2-wheelers and 3-wheelers in the country. In the late 1950s, it obtained a manufacturing license and started producing scooters. 

Bajaj Auto has grown into the world’s most valuable 2 and 3-wheelers company with a presence in over 70 countries. It makes well-known motorcycle brands including Pulsar, Avenger, & Platina, and Bajaj RE 3–wheeler auto.

Additionally, Bajaj Auto owns a 49.9% stake in the sports bike maker KTM Group parent’s company. It manufactures KTM & Husqvarna motorcycles at its Maharashtra plant and exports them globally.

Despite a downturn in the industry, the company has increased its domestic 2-wheelers market share to 18.2% in FY22 from 15.7% in FY18. Similarly, it has gained the market in the 3-wheelers sub-segment in the last three years.

The effect is visible in the bottom line of Bajaj which has consistently increased (barring FY21) from Rs 4,219 crore in FY18 to Rs 6,166 in FY22. The consistency in earnings is also because exports account for over 50% of the sales, thus geographically diversifying the operations. 

Top Automobile Stocks in India #5 – Eicher Motors

Eicher Motors Logo
CMP₹3,200Market Cap (Cr.)₹87,500
EPS₹85.40Stock P/E37.50
RoCE18.3%RoE14.0%
Face Value₹1.0Book Value₹486.00
Promoter Holding49.2%Price to Book Value6.59
Debt to Equity0.01Dividend Yield0.66%
Net Profit Margin16.3%Operating Profit Margin21.2%

Holding company of the renowned Royal Enfield (RE), Eicher Motors is an international leader in the mid-market 2-wheelers segment (250cc-750cc). In addition to this, it also manufactures trucks & buses and performs sales, distribution, and after-sales services of Volvo buses in India.

From its inception in 1948, Eicher Motors has seen ownership changes, the sale of its tractor & engines business, the acquisition of Royal Enfield & its subsequent merger, and a joint venture with Volvo Group.

Eicher sold 5.95 lakh motorcycles in FY22 commanding a 90% market share in the middle-weight motorcycle segment in India. Additionally, through its joint venture, it sold 57,077 vehicles strengthening its 29.3% share in India’s light CV and medium CV segments.

RE has more than 2,100 retail outlets across India with 3 production facilities. It has two design centers in UK and India and contributes to the majority of the revenues of Eicher. 

Eicher is a debt-free stock with a promoter holding at 49.2%. It has high operating and net profit margins with adequate return ratios.

List of Top Automobile Stocks in India 2023

We looked at the five top automobile stocks in India in 2023 above. The list below presents more such stocks.

Company NameCMP (Rs)Market Cap (Rs Cr)
Maruti Suzuki India8,305250,000
Mahindra & Mahindra1,234155,000
Tata Motors394140,000
Bajaj Auto3,591105,000
Eicher Motors3,20087,500
Hero MotoCorp2,63853,000
TVS Motor Company1,01148,000
Ashok Leyland13841,500
Escorts Kubota2,01326,500

In Conclusion

We are now at the end of our article on top automobile stocks in India 2023. It is considered a good strategy to have a sectoral concentration in the hope of potential gains from the industry boom. However, one should be bullish to the extent of how well one understands the sector.

In conclusion, the Indian automobile industry is a rapidly growing market with many opportunities for investment. The top automobile stocks in India to watch out for in 2023 include Maruti Suzuki India Limited, Tata Motors Limited, Mahindra & Mahindra Limited, Bajaj Auto Limited, and Eicher Motors Limited. These companies have a strong presence in the Indian market, produce a wide range of vehicles, and have a good track record. However, it’s important to keep in mind that the stock market can be unpredictable and subject to various external factors. Therefore, it’s always a good idea to do your own research and consider your own investment goals and risk tolerance before investing in any stock.

Do you think the auto boom has come or will it still take some time? How about you let us know in the comments below?

Poonit Rathore

My name is Poonit Rathore. I am a Blogger, Content-writer, and Freelancer. Currently, I am pursuing my CMA final from ICAI. I live in India.

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