According to the futuristic in the future, the mode of journey or travels will be the electric vehicle. It isthe latest technology with no pollution and less expenditure. The electric vehicles cost less as compared to the vehicles which run on petrol or diesel. Electric vehicles are lighter and easy to maintain than that of Petrol or diesel vehicles. Now we will discuss which stocks will benefit from electric vehicles in India.
What is an Electric Vehicle
Electric vehicles run on chargeable batteries. Its component parts are made of high quality of plastics or fiber to reduce the weight of the vehicle so that less energy is consumed. As a battery is needed in this kind of vehicle battery companies will witness enormous growth. So naturally, companies producing these materials will do well in business. High-quality plastics or fiber industry will get a boost.
Benefits of Electric Vehicle
The price of electric vehicles is cheaper as compared to petrol or diesel vehicles. Electric vehicles are energy efficient and consume very little electricity that can be supplied through chargeable batteries. To run an electric vehicle is much cheaper as it needs a very low quantity of electricity instead of petrol or diesel which is very costly. Obviously, people will spend a lesser amount to run this kind of vehicle. As a result of this, the sale of electric vehicles will increase.
Now the government has to give a huge amount of subsidy on petrol and diesel. Electric vehicles will reduce the consumption of petrol and diesel. So the subsidy amount will fall significantly and this huge money can be spent on infrastructure development and other social programs.
An electric vehicle can run up to 80 km. when its battery fully charged. Now someone who is travelling more than 80 km. may have to face difficulties. So he needs a charging station to charge the battery of his electric vehicle. In this context, the government should make an action plan of setting up a charging station after every 20kms.
Which stocks will benefit from electric vehicles in India
Various auto companies like Mahindra & Mahindra, Maruti Suzuki have launched several electric vehicles. So investors have opportunities to gain enormous returns by investing in these kinds of companies operating in electric vehicles and making its component parts like Lithium-ion batteries.
Auto Companies: Maruti Suzuki, Mahindra & Mahindra, TVS Motors, Hero Motocorp, Bajaj Auto, Ashok Leyland.
Auto Ancillary Companies: Minda Industries, Motherson Sumi.
Engineering Companies: Graphite India, HEG.
Plastic Companies: Neelkamal Ltd.
Battery: Exide Industries, Amara Raja Batteries (Amaron), BHEL.
Infrastructure companies: ABB India, Siemens, NBCC, L & T.
How to pick the best stocks
In order to pick the best stocks for consistent returns, you should check out the following parameters of a company before investing in a stock.
- Revenue – Revenue or net sales of a company should be constant for at least 5 years. You may check that the company has been generating sales growth annually during the last 5 financial years of at least 10%.
- Net Profit – The net profit of a company increases at least 15% on a year-on-year basis.
- Earnings Per Share (EPS) – EPS is to be and grow at a rate of 10% for the last 5 years.
- Price to Earnings Ratio (P/E) – P/E ratio should be low as compared to the other peer companies active in the same industry.
- Price to Book Ratio (P/B) – P/B should be low as compared to peer companies operating in the same industry.
- Debt to Equity Ratio – A debt-free company is desirable. If not so the ration must be low to 0.10 or 0.25.
- Return on Equity (ROE) – should be greater than 20%
- Dividend Yield – You can ensure about good dividend yield by the company.
- Beta – Invest in stocks whose Beta is less than 1 which indicates that the share is theoretically less volatile than the market.
Which Stocks will benefit from Electric Vehicles in India
I hope you must have got a fair idea that how to identify the best stock for investment. Now we will discuss the best electrical vehicle stocks to buy for long term growth.
Fundamental analysis of Maruti Suzuki
Maruti Suzuki was incorporated in the year 1981. It is a Large Cap company operating in Auto sector. Maruti Suzuki has a vast business model across India. Its key Products/Revenue Segments include Passenger Cars & Light Duty Utility Vehicles, Scrap, and Export Incentives.
Let’scheckout its fundamentals,
- Revenue Growth – 9.84%
- Net Profit Growth – 2.52%
- Earnings per Share (EPS) – ₹133.50
- Price to Earnings Ratio (P/E) – 53.89
- Price to Book Ratio (P/B) – 4.40
- Debt to Equity Ratio – 0.00
- Return on Equity (ROE) – 13.50%
- Dividend Yield (%) – 0.83
- Beta – 1.35
Fundamental analysis of TVS Motor Company Ltd.
TVS Motor Company Ltd. was incorporated in the year 1992. It is a Large Cap company operating in Auto sector. Its key Products/Revenue Segments include automobiles i.e. 2 & 3 Wheelers, the sale of services, etc.
Let’scheckout its fundamentals,
- Revenue Growth – 15.29%
- Net Profit Growth – 33.94%
- Earnings per Share (EPS) – ₹6.29
- Price to Earnings Ratio (P/E) – 69.18
- Price to Book Ratio (P/B) – 5.74
- Debt to Equity Ratio – 1.59
- Return on Equity (ROE) – 22.70%
- Dividend Yield (%) – 0.76
- Beta – 1.54
Fundamental analysis of Ashok Leyland
Ashok Leyland Ltd. is a Large Cap company. The company was incorporated in the year 1948. It operates in the Auto sector. Ashok Leyland produces heavy motor vehicles like trucks, buses, engines, etc. It is the second-largest commercial vehicle manufacturer in India.
Let’scheckout its fundamentals,
- Revenue Growth – 6.92%
- Net Profit Growth – 19.71%
- Earnings per Share (EPS) – -₹1.09
- Price to Earnings Ratio (P/E) – -64.2
- Price to Book Ratio (P/B) – 2.31
- Debt to Equity Ratio – 1.49
- Return on Equity (ROE) – 19.40%
- Dividend Yield (%) – 0.72
- Beta – 1.54
Fundamental analysis of Minda Industries
Minda Industrieswas incorporated in the year 1992. It is a Mid Cap company that works in the Auto Ancillaries sector. Its key Products/RevenueSegments include Switches, Horns, Lighting Products, Scrap, and LED Lights.
Let’scheckout its fundamentals,
- Revenue Growth – 24.32%
- Net Profit Growth – 21.05%
- Earnings per Share (EPS) – – ₹0.64
- Price to Earnings Ratio (P/E) – -535.01
- Price to Book Ratio (P/B) – 4.30
- Debt to Equity Ratio – 0.17
- Return on Equity (ROE) – 16.63%
- Dividend Yield (%) – 0.12
- Beta – 1.06
Fundamental analysis of Motherson Sumi
Motherson Sumi was incorporated in the year 1986. It is a Large Cap company that works in the Auto Ancillaries sector. Its key Products/RevenueSegments include Auto Electricals, Scrap, and LED Lights.
Let’scheckout its fundamentals,
- Revenue Growth – 25.23%
- Net Profit Growth – 16.80%
- Earnings per Share (EPS) – ₹0.09
- Price to Earnings Ratio (P/E) – 1262.62
- Price to Book Ratio (P/B) – 2.39
- Debt to Equity Ratio – 0.74
- Return on Equity (ROE) – 19.62%
- Dividend Yield (%) – 1.19
- Beta – 1.60
Note: This is the few lessons from the book which I discovered from Peter Lynch’s brilliant book ‘Beating the Street.
Fundamental analysis of Graphite India
Graphite India was incorporated in the year 1974. It is a Mid Cap company operating in theEngineering sector. Its key Products/Revenue Segments include Graphite Electrodes Anodes, Graphite Equipments, GRP Pipes, Tanks & Soils, High-Speed Steel etc.
Let’scheckout its fundamentals,
- Revenue Growth – 8.68%
- Net Profit Growth – -15.27%
- Earnings per Share (EPS) – – ₹12.95
- Price to Earnings Ratio (P/E) – – 14.42
- Price to Book Ratio (P/B) – 0.80
- Debt to Equity Ratio – 0.00
- Return on Equity (ROE) – 23.19%
- Dividend Yield (%) – 1.07
- Beta – 1.48
Fundamental analysis of Exide Industries
Exide Industries was incorporated in the year 1947. It is a Large Cap company that works in the Auto Ancillaries sector. Its key Products /RevenueSegments include Batteries (Storage).
Let’scheckout its fundamentals,
- Revenue Growth – 13.88%
- Net Profit Growth – 4.78%
- Earnings per Share (EPS) – ₹6.95
- Price to Earnings Ratio (P/E) – 23.4
- Price to Book Ratio (P/B) – 2.09
- Debt to Equity Ratio – 0.00
- Return on Equity (ROE) – 16.02%
- Dividend Yield (%) – 2.56
- Beta – 1.16
Fundamental analysis of NBCC (India) Ltd.
NBCC (India) Ltd.was incorporated in the year 1960. It is a Mid Cap company that has a market cap of Rs. 9522 Crore. It operates in the Construction sector. It deals in theReal Estate Development& construction business and also offers the service of Project Management Consultancy.
- Revenue Growth – 12.98%
- Net Profit Growth – – 22.41%
- Earnings per Share (EPS) – ₹0.43
- Price to Earnings Ratio (P/E) – 61.32
- Price to Book Ratio (P/B) – 2.99
- Debt to Equity Ratio – 0.00
- Return on Equity (ROE) – 18.49%
- Dividend Yield (%) – 0.51
- Beta – 1.84
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