NEW DELHI: Now that the Centre is gung ho about electrifying the automobile sector, a study by equity research firm Equitymaster reveals that the top electric vehicle stocks in the commercial space have shot up over 100% as EVs are gradually replacing internal combustion engine (ICE) vehicles.
As per the Equitymaster study, EV stocks in the commercial vehicles space include Tata Motors, Olectra Greentech, JBM Auto, Ashok Leyland, SML Isuzu, Eicher Motors, and M&M.
Companies manufacturing electric buses including Ashok Leyland, JBM Auto, Olectra Greentech have gained a lot of traction as India moves towards its plan to reduce carbon emissions. State governments have also been inviting tenders to buy electric buses for public transport facilities, which ensures a strong order push for companies like Ashok Leyland, JBM Auto, Olectra Greentech, Tata Motors and Eicher Motors.
“State governments are inviting tenders to buy electric buses for public transport facilities. This gives a strong order push to companies manufacturing electric buses like Ashok Leyland, JBM Auto, Olectra Greentech, Tata Motors, and Eicher Motors. Tata Motors was one of the first companies to develop a fully electric commercial vehicle on its own. It is preparing to launch its first electric truck. Tata Motors is already the leader in the electric passenger vehicle segment with a share of more than 70%,” said the study.
Recently, Maharashtra environment minister Aditya Thackeray announced that Mumbai’s entire public transport buses will go electric by 2028 while the Karnataka government is all set to acquire 1,500 electric buses in the next three years.
Olectra Greentech is one of the lesser known companies with interests in electric buses, composite insulators, amorphous core-distribution transformers, data analytics, and IT consulting. The Hyderabad-based company has a healthy order book for 1,325 e-buses out of which 87 buses are already delivered. It is also setting up India’s biggest electric bus factory with a capacity of 10,000 units on the outskirts of Hyderabad.
Here is how these companies have performed in terms of stock performance over the last one year
While Tata Motors has shot up 162% in the last one year, Olectra Greentech is the one that stands out with a massive 582.9% gain. ICRA rating agency has reaffirmed the enhanced ratings of Olectra Greentech’s Rs 265 crore long term/short term – non-fund based instrument with a positive outlook.
“The ratings factor in the expected strong performance of Olectra Greentech’s e-bus division in H2 FY2022 which is likely to support growth in its revenues and margins. The company’s order book of the e-bus division improved significantly to 1,575 buses as on November 16, 2021 as against 792 as on June 30, 2020,” ICRA said.
JBM Auto, which is the first company in India to be ready with a BS-VI compliant 12m LF CNG bus for public transportation, is also up 287% in the last one year. Last month, the company received orders for 500 electric buses and some compressed natural gas (CNG) buses from Delhi, Bengaluru and Uttar Pradesh.
What about the two and three-wheeler segment?
India’s leading manufacturers of two-wheelers are gearing up to tap growing demand for clean vehicles. Hero MotoCorp is ready to roll out its first e-scooter by March. More than a dozen electric two-wheel models are under development at Hero, Bajaj Auto, TVS Motor and Honda.
“Even though the current electric two wheeler market is in a nascent stage of growth, it is well-positioned to explode in the next 5-7 years driven by a push from both the demand and supply sides,” said consultancy firm BCG in a report.
According to Equitymaster, the homegrown two-wheeler majors such as TVS Motors, Bajaj Auto, Hero MotorCorp and Greaves Cotton have fast-tracked their EV plans to capture reasonable market shares in the coming years.
Here’s how the top stocks from the segment have performed this year
EV battery makers
Lithium ion batteries are being touted as the future of automobile energy. These batteries are the most expensive component in EVs, accounting for 40-50% of its cost. Currently, most electric vehicle makers import cells and batteries from China, but Indian companies are now accelerating plans to produce lithium-ion cells in the country, hoping to take advantage of Rs 18000 crore worth of government subsidies. The Centre has earlier approved a Rs 18,100 crore PLI scheme to build Tesla-like factories for manufacturing batteries.
According to Tanushree Banerjee, head of research, at Equitymaster, the top 3 EV battery makers to watch out for in India are as follows:
1 Amara Raja Batteries: It is India’s second-largest automotive batteries manufacturer. The company recently invested Rs 200 million into India’s maiden technology hub to develop lithium-ion cells, at its Tirupati facility in Andhra Pradesh and also has a technology transfer agreement with the Indian Space Research Organisation (ISRO) since early 2019.
2.Exide Industries is primarily engaged in the manufacturing of storage batteries and allied products in Indi. The company has recently invested Rs 331.7 million in its subsidiary Exide Leclanche Energy and increased its stake from 77.9% to 80.2%. In June 2018, Exide Industries and Leclanche, a global energy storage solutions provider, formed a joint venture (JV) to build lithium-ion batteries and provide energy storage systems for India’s EV market and grid-based applications.
3.Kabra Extrusion Technik: Battrixx, a wholly owned subsidiary of KabraExtrusiontechnik (KET) has launched its 4 kWh Dual Power electric vehicle smart batteries for Indian drive conditions. The pack uses two 2kWh smart battery packs in parallel or series designed based on a patented European technology which has been licensed to Kabra Extrusiontechnik. KEL has also completed its major capex programme pertaining to manufacturing plant for lithium-ion battery packs for electric vehicles.
Charging infrastructure
Work is underway to set up charging stations for electric vehicles at 22,000 of the 70,000 petrol pumps across the country. The government’s priority is to set up charging stations on express highways, highways and populated cities as of now. The power ministry has already sanctioned 2,877 electric vehicle charging stations in 68 cities across 25 states/UTs and 1,576 charging stations across nine expressways and 16 highways under Phase II of FAME India Scheme. According to the government’s guidelines, there must be at least one charging station at every 25 kms on both sides of a highway and also at least one charging station for long range and heavy duty EVs at every 100 kms on both sides of a highway, which means that charging points are the next big thing.
“Companies are tying up with startups to tap into this opportunity. Hero Electric has already announced a collaboration with Bengaluru-based EV charging start-up Charzer to establish one lakh charging stations across India. The top listed companies involved in this space include, Tata Power, Indian Oil Corporation (IOC), BPCL, Reliance Industries, NTPC, and Power Grid Corporation,” noted Equitymaster.
Here’s how the above stocks from the charging infrastructure segment have performed this year
Of all the companies mentioned above, Tata Power is aggressively expanding its electric vehicle charging network and already has tie-ups with EV makers like MG Motor India, Jaguar Land Rover (JLR) India, and Tata Motors for charging infrastructure. Meanwhile, sister company Tata Motors has partnered with Tata Power to set up over 300 fast-charging stations over diverse cities across Delhi, Mumbai, Bangalore, Pune, and Hyderabad.
Auto ancillaries
According to Ambit Capital, EV component makers are eyeing a $4 billion market by FY30 thanks to incentives offered by the Centre and states. “This includes parts like motors, controllers, on-board chargers, battery management system, telematics, sensors etc. By FY30, we expect an additional opportunity of $4 billion for component makers, not including newly added expertise to build an export franchise, with rising demand for e-2Ws. On a base of $7 billion India 2W OEM ex-powertrain component market, there would be a boost of nearly 60 per cent from incremental domestic demand itself by CY30,” it said.
Companies like Sona BLW Precision, Motherson Sumi, Suprajit Engineering, Minda Industries, and Fiem Industries have announced acquisitions of EV tech companies or are ramping up their component business with an eye on the global market as well, noted Equitymaster.
Indian auto ancillary companies are now working with global players in areas like wiring harnesses, rearview mirrors, cockpits, bumpers, and more.
Meanwhile, chemical companies have entered the lithium-ion battery business, where they plan to build an integrated business which includes cell manufacturing, battery recycling, and battery production.
India’s electric vehicle (EV) market is expected to grow at a compounded annual growth rate (CAGR) of 90 per cent in this decade to touch $150 billion by 2030, said a report by consulting firm RBSA Advisors.
In terms of penetration, EV sales accounts for barely 1.3 per cent of total vehicle sales in India during 20-21. However, the market is growing rapidly and is expected to be worth more. . The demand incentives provided under FAME II, the launch of state policies, rising fuel prices, tightening emissions laws and increasing awareness of the green environment are few factors making the sector attractive to larger automobile players and financial investors, said the report.
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“It is not the same game it was two years back,” Pradeep told ET. Soaring diesel price over this period has resulted in more and more public transport bodies considering e-buses over diesel vehicles for their fleets. “As components and batteries get more affordable with localisation, the price economics will further tilt in the favour of EVs,” he said.
Riding on increased demand, the state is gradually building a sound ecosystem for manufacturing electric vehicles (EVs). Gujarat is already home to automobile giants such as Tata Motors, Honda Motorcycles and Scooters India Limited, Hero Two-wheelers, and Suzuki Motor Corporation.