Top Automobile Stocks in India: Analysts expect the automobile industry to boom again in India after years of drought. Reducing unemployment, rising incomes, and rapidly growing credit demand will likely bring auto sales. Amidst these hopes of huge potential gains, let us take a look at the top automobile stocks in India 2023 that investors can add to their watchlists.
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)
| Category | 2017-18 | 2018-19 | 2019-20 | 2020-21 | 2021-22 |
| Passenger Vehicles (PV) | 40.20 | 40.28 | 34.25 | 30.62 | 36.51 |
| PV – YoY Growth / Degrowth(%) | 5.75% | 0.20% | -14.99% | -10.58% | 19.22% |
| Commercial Vehicles (CV) | 8.95 | 11.12 | 7.57 | 6.25 | 8.06 |
| CV – YoY Growth / Degrowth(%) | 10.51% | 24.23% | -31.97% | -17.42% | 28.90% |
| Three Wheelers (3-W) | 10.22 | 12.69 | 11.33 | 6.15 | 7.58 |
| 3-W – YoY Growth / Degrowth(%) | 30.43% | 24.13% | -10.71% | -45.75% | 23.34% |
| Two Wheelers (2-W) | 231.55 | 245.00 | 210.33 | 183.50 | 177.15 |
| 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
| CMP | ₹8,305.0 | Market Cap (Cr.) | ₹250,000 |
| EPS | ₹201 | Stock P/E | 41.4 |
| RoCE | 8.95% | RoE | 7.25% |
| Face Value | ₹5.0 | Book Value | ₹1,893 |
| Promoter Holding | 56.4% | Price to Book Value | 4.39 |
| Debt to Equity | 0.01 | Dividend Yield | 0.73% |
| Net Profit Margin | 4.43% | Operating Profit Margin | 6.51% |
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
| CMP | ₹1,234 | Market Cap (Cr.) | ₹155,000 |
| EPS | ₹74 | Stock P/E | 18.4 |
| RoCE | 11% | RoE | 14.2% |
| Face Value | ₹5.0 | Book Value | ₹406 |
| Promoter Holding | 19.4% | Price to Book Value | 3.04 |
| Debt to Equity | 1.65 | Dividend Yield | 0.94% |
| Net Profit Margin | 7.69% | Operating Profit Margin | 16.30% |
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.
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
| CMP | ₹394 | Market Cap (Cr.) | ₹140,000 |
| EPS | -₹22.19 | Stock P/E | -15.4 |
| RoCE | 1.4% | RoE | 22.3% |
| Face Value | ₹2.0 | Book Value | ₹78.8 |
| Promoter Holding | 46.4% | Price to Book Value | 5 |
| Debt to Equity | 5.52 | Dividend Yield | 0.00% |
| Net Profit Margin | -4% | Operating Profit Margin | 8.8% |
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 defence 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
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
| CMP | ₹3,591 | Market Cap (Cr.) | ₹105,000 |
| EPS | ₹202 | Stock P/E | 18.6 |
| RoCE | 23.4% | RoE | 19.0% |
| Face Value | ₹10.0 | Book Value | ₹900 |
| Promoter Holding | 54.8% | Price to Book Value | 3.99 |
| Debt to Equity | 0.0 | Dividend Yield | 3.90% |
| Net Profit Margin | 16.4% | Operating Profit Margin | 15.9% |
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
| CMP | ₹3,200 | Market Cap (Cr.) | ₹87,500 |
| EPS | ₹85.40 | Stock P/E | 37.50 |
| RoCE | 18.3% | RoE | 14.0% |
| Face Value | ₹1.0 | Book Value | ₹486.00 |
| Promoter Holding | 49.2% | Price to Book Value | 6.59 |
| Debt to Equity | 0.01 | Dividend Yield | 0.66% |
| Net Profit Margin | 16.3% | Operating Profit Margin | 21.2% |
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 Name | CMP (Rs) | Market Cap (Rs Cr) |
|---|---|---|
| Maruti Suzuki India | 8,305 | 250,000 |
| Mahindra & Mahindra | 1,234 | 155,000 |
| Tata Motors | 394 | 140,000 |
| Bajaj Auto | 3,591 | 105,000 |
| Eicher Motors | 3,200 | 87,500 |
| Hero MotoCorp | 2,638 | 53,000 |
| TVS Motor Company | 1,011 | 48,000 |
| Ashok Leyland | 138 | 41,500 |
| Escorts Kubota | 2,013 | 26,500 |
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.
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?
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