Top 10 Auto Stocks in India (2024)

The Nifty Auto index has gained over 74.43% in the last year propelling many Nifty auto stocks recording double-digit growth. The increased demand for cars and motorcycles in India, rising disposable incomes, and government incentives for electric vehicles, are the driving factors behind this exponential growth. With a prediction to grow at a CAGR of 10% in the next 5 years, the auto sector stocks, with high price upside, are forecasted to deliver strong returns. 

In this blog, we have identified the list of top 10 auto stocks in India, along with the benefits and things to keep in mind before investing in auto sector companies. Let’s begin.

What are Auto Sector Stocks?

Auto sector stocks are shares of companies that are part of the automotive industry, which includes manufacturers of vehicles and components like battery, tyres, etc. Auto companies in India employ around 3.2 cr. people, both directly and indirectly, which contributes 15% to the country’s total tax collections.

Being a cyclical industry, the global auto industry is expected to grow at a compound annual growth rate (CAGR) of 3.6% from 2022 to 2027

Types of Auto Stocks Listed in NSE

Different types of auto stocks listed in NSE are as follows – 

• Automakers: The backbone of the automotive industry, consisting of companies that manufacture a wide range of vehicles including cars, trucks, buses, SUVs, and the increasingly popular Electric Vehicles (EVs).
• Suppliers: These companies are critical to the automakers, supplying everything from basic components like seats, tires, and batteries to more advanced technology like electronic systems that enhance vehicle performance and safety.
• Auto Parts Retailers: Specialised in selling auto parts and accessories to consumers and professional mechanics. These retailers range from large chains to smaller, local shops, offering a wide variety of parts for repair and maintenance.

Auto Dealers: The face of the automotive sales industry, auto dealers operate showrooms and lots where consumers can buy new and used vehicles. They play a crucial role in the automobile market, facilitating the connection between manufacturers and end consumers.

List of Top 10 Auto Stocks in India

Listed below are the top auto stocks in India right now –

Best Auto Stocks in India	Sub-Sector	Market Cap (Rs. in cr.)	Close Price (Rs.)	1Y Return (%)
Maruti Suzuki India Ltd	Four Wheelers	3,90,734.80	12,427.85	46.16
Tata Motors Ltd	Four Wheelers	3,69,400.91	1,009.15	137.87
Bajaj Auto Ltd	Two Wheelers	2,53,507.78	9,080.45	127.37
Mahindra and Mahindra Ltd	Four Wheelers	2,38,191.28	1,989.30	70.04
Tata Motors Ltd	Four Wheelers	1,51,860.11	668.35	214.67
TVS Motor Company Ltd	Two Wheelers	99,977.33	2,104.40	94.00
Hero MotoCorp Ltd	Two Wheelers	91,108.34	4,557.20	87.45
Bosch Ltd	Auto Parts	90,886.57	30,815.65	58.56
Samvardhana Motherson International Ltd	Auto Parts	81,588.11	120.40	78.11
MRF Ltd	Tires & Rubber	57,760.42	136,190.70	61.36

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data on the best automobile stocks in India is from 4th April 2024. These auto sector stocks list is sorted based on market capitalisation. However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!

Overview of the Top Automobiles Stocks in India

Here is a brief overview of the best auto stocks to invest in India –

Maruti Suzuki India Ltd 

Maruti Suzuki India Limited, a key player in the automotive industry, is known for making and selling vehicles and parts. It’s also involved in used car sales, fleet management, and car financing. Among the auto companies listed in NSE, this auto company is expected to see a 16.01% revenue growth and a 52.28% earnings growth next year, outpacing its past performance. Additionally, compared to other auto stocks in NSE, its market share has grown from 17.03% to 19.66% over the last 5 years, highlighting its increasing dominance. 

Tata Motors Ltd

Tata Motors Limited, an automobile manufacturer, is set for significant growth. Among the other automotive stocks, this large-cap auto company anticipates a 24.37% increase in revenue next year, surpassing the last 3 years’ growth rate of 10.09%. Furthermore, its earnings are expected to soar by 644.92% next year, a stark contrast to the previous 3 years, where there was no earnings growth. This marks a notable turnaround and promising future for the company.

Bajaj Auto Ltd

Bajaj Auto Limited, specialising in motorcycles, 3-wheelers, and parts, anticipates a 15.99% revenue growth next year, outdoing its last 3 years’ growth of 6.32%. Its earnings are also expected to jump by 24.78%, significantly higher than the previous 5.55%. Over 5 years, its market share has modestly increased from 34.98% to 36.19%. Additionally, Bajaj Auto’s net income and revenue have grown annually at 7.51% and 7.44%, respectively, surpassing industry averages, which is the best among auto sector companies.

Mahindra and Mahindra Ltd 

Mahindra and Mahindra Limited, a manufacturer of passenger cars, commercial vehicles, and tractors, has seen notable growth. In the past 5 years, its revenue increased annually by 5.65%, outperforming other auto industry shares average of 4.67%. Additionally, its net income rose by 6.48% yearly, significantly better than the industry’s average decline of -3.06%. This highlights Mahindra and Mahindra’s solid performance and growth in a challenging market. 

Tata Motors Ltd

Tata Motors Limited, an automobile manufacturer, is experiencing a strong upward trend in its stock price. Analysis using the Tickertape Stock Screener shows that analysts give it the highest buy recommendation. This indicates a positive outlook on the stock’s future performance and suggests confidence in the company’s potential for growth and profitability among financial experts.

TVS Motor Company Ltd

TVS Motor Company Limited, a maker of motorcycles, scooters, mopeds, 3-wheelers, and related accessories, is forecasting a 55.22% earnings growth for next year, surpassing its past 3-year growth of 28.61%. Over the last 5 years, the revenue growth rate of this auto sector stock is 14.33%, annually outdid the automobile shares list average of 6.71%. Additionally, TVS has significantly increased its market share from 21.57% to 30.45% in the same period, indicating robust performance and expanding influence in the industry.

Hero MotoCorp Ltd

Hero MotoCorp Limited, specialising in two-wheelers up to 350 cc, along with spare parts and services, projects a 7.42% revenue growth next year, outpacing its last 3-yr average of 4.13%. Impressively, its expected earnings growth is set at 44.37% for the coming year, a significant turnaround from a -8.26% growth rate over the past 3 years. This indicates a strong recovery and positive outlook for the company’s financial performance.

Bosch Ltd

Bosch Limited, involved in manufacturing and trading automotive products, showcases strong financial health. In the last 5 years, its current ratio stood at 188.91%, significantly higher than the industry average of 103.24%. Additionally, its debt to equity ratio has been notably low at 0.5%, compared to auto shares list average of 73.51%. These figures indicate Bosch’s solid liquidity and minimal reliance on debt, distinguishing it positively within its industry.

Samvardhana Motherson International Ltd

Samvardhana Motherson International Limited, focusing on automotive and transport components, forecasts a 24.85% revenue growth next year, surpassing its 3-yr average of 8.76%. The company also expects a 63.11% earnings growth, significantly higher than the past 3 years’ average of 2.48%. Additionally, its 5-yr debt to equity ratio of 72.03% is slightly below the automobile industry shares average of 73.51%, indicating a competitive financial leverage position in the industry.

MRF Ltd

MRF Limited, a producer and seller of automotive tires, tubes, flaps, and other rubber products, anticipates a significant earnings growth of 185.87% next year, a sharp reversal from a -18.54% decline over the past 3 years. Its financial structure is robust, with a 5-yr debt to equity ratio of just 19.92%, far below the industry average of 56.02%. Additionally, its current ratio over the last 5 years averaged 144.71%, outperforming the industry average of 108.55%, showcasing strong liquidity. This automobile share price is the highest in the NSE.

Features of Automobile Sector Stocks

Investing in automobile sector stocks involves a nuanced understanding of key features that influence their performance:

• Market Trends: Monitor global and regional trends impacting the automotive car industry and the best stocks in the automobile sector in India, such as advancements in electric vehicles, regulatory changes, and shifts in consumer preferences.
• Economic Indicators: Stay informed about economic factors like interest rates, inflation, and GDP growth, as they significantly influence the demand for automobiles.
• Company Performance: Analyse financial reports and track the performance of individual automotive companies and their motor stocks in India. Factors like revenue growth, profit margins, and market share provide valuable insights.
• Technological Innovation: Consider how companies adapt to technological advancements, such as developments in autonomous driving, connectivity, and sustainability, as these factors can impact competitiveness.
• Regulatory Environment: Be aware of regulatory changes related to emissions standards, safety requirements, and trade policies, as they can affect the overall health of the sector and in turn, even the top auto shares in India.
• Global Supply Chain Dynamics: Understand the complexities of the automotive supply chain, by observing our automobile sector share list, including raw material costs, manufacturing processes, and distribution networks, to gauge potential risks and opportunities.

How to Identify the Best Auto Stocks In India?

Identifying top auto stocks in India involves understanding the sector’s unique dynamics. Here’s how:

• Learn About the Auto Sales Cycle: Auto stocks are cyclical, with profits hinging on consumer confidence. Economic downturns often lead to postponed vehicle purchases, impacting automakers due to their high fixed costs, including factory operations and labour. Their need for continuous product development to stay competitive adds to the challenge during economic lows.
• Examine Cash Reserves: Successful companies maintain robust cash reserves, enabling continuous investment in product development, even during recessions. This strategy was evident when certain automakers thrived by launching new products post-recession, highlighting the importance of financial resilience.
• Competitive Analysis: The newest products command premium prices and profits. Continuous investment in development ensures a flow of fresh products, crucial for staying ahead. Additionally, investments in futuristic technologies like electric vehicles (EVs) and autonomous driving systems are key for competitiveness.
• Electric Vehicle Influence: EVs present a promising opportunity, expected to see significant growth in near future. Despite the high manufacturing costs akin to traditional vehicles, the shift towards EVs represents a future trend. Competition is increasing as traditional automakers also enter the EV market.

Investing in auto sector stocks with a strong foothold in the replacement market, significant cash reserves for innovation, and a keen eye on evolving technologies like EVs can be strategic for navigating the cyclical nature of the automobile sector.

Why To Invest in Auto Sector Shares?

Investing in auto sector stocks can be beneficial for a few reasons. First off, the growth projection of the auto sector, based on demand, is relatively high. This demand can lead to steady sales and profits for auto companies.

Additionally, one big trend right now is the shift towards green energy and renewable energy. With concerns about the environment and rising fuel costs, more and more people are looking for electric and hybrid cars. This shift presents a great opportunity for auto companies to innovate and create fuel-efficient vehicles that are better for the planet.

Advantages of Investing in Automobile Stocks

Investing in automobile stocks offers several advantages for investors looking to diversify their portfolios and potentially profit from this dynamic industry. Here are four key advantages:

• Potential for Long-Term Growth: The automobile industry has historically shown resilience and adaptability to changing market conditions. Investing in established automobile companies can provide exposure to long-term growth, driven by global demand for vehicles.
• Dividend Income: Many automobile companies offer dividends to their shareholders, making them attractive for income investors. These dividends can provide a steady stream of passive income, especially from well-established companies.
• Innovation and Technological Advances: The companies with vehicle stocks in India are at the forefront of innovation, with advancements in electric vehicles, autonomous driving technology, and connectivity. Investing in companies leading these innovations can be rewarding as the industry evolves.
• Global Reach: Leading automobile manufacturers have a global presence, with operations and sales in various countries. This global reach can help diversify your investment portfolio and reduce risk associated with regional economic fluctuations.

By carefully selecting automobile stocks, conducting thorough research, and staying informed about industry trends, investors can harness these advantages to build a well-rounded investment strategy.

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Factors to Consider Before Investing in Automobile Stocks

Investing in auto sector stocks can be pretty exciting, but there are a few things you should think about before diving in. Let’s break it down:

• Market Trends: Keep an eye on what’s happening in the auto sector stock world. Are electric vehicles (EVs) becoming more popular? Is there a shift towards eco-friendly options? Understanding trends can help you make smarter investment decisions.
• Company Performance: Take a look at how the company you’re interested in is doing. Are their sales going up? Is their market share growing? A company with a solid track record is usually a safer bet.
• Competition: Check out who the company’s competitors are. Are they ahead in innovation? Strong competition can affect a company’s growth and market share.
• Economic Factors: Consider the overall economy. If people have less money to spend, they might hold off on buying new cars, affecting the company’s performance.
• Regulations & Policies: Automobile companies are often affected by government regulations. Keep an eye on policies related to emissions, safety standards, and more.
• Technology & Innovation: See if the company is investing in new technologies like autonomous driving or connectivity. Being at the forefront of innovation can give them an edge in the stock market.
• Global Factors: Consider how the global economy is doing. Indian auto sector stocks can be influenced by factors like economic growth, consumer spending, and interest rates.

Risks Associated with Investing in Automobile Stocks

Investing in automobile stocks can be rewarding, but it’s essential to be aware of the risks. Here are some potential pitfalls to consider:

• Market Cyclicity: The automotive industry NSE India is cyclical, with sales often influenced by economic conditions. During economic downturns, demand for vehicles can plummet, affecting auto industry share prices of automobile shares in India.
• Regulatory Changes: Stringent environmental regulations can significantly impact automobile manufacturers. Changes in emission standards or fuel-efficiency requirements can lead to increased production costs and affect profitability.
• Competition: The automobile industry is highly competitive, with numerous players vying for market share. Established companies and new entrants constantly innovate and compete, which can pressure profit margins.
• Supply Chain Disruptions: Disruptions in the supply chain, like shortages of key components or disruptions due to natural disasters, can impact production and auto sector share prices.

It’s essential for investors to conduct thorough research, diversify their portfolios, and stay informed about industry trends and developments to mitigate these risks when investing in automobile stocks.

Who Should Invest in Auto Sector Stocks in India?

Investing in automobile sector stocks can be a lucrative opportunity, but it’s not suitable for everyone. Here are key considerations to determine if this sector aligns with your investment profile:

• Long-term Investors: Given the cyclical nature of the automobile industry, which can lead to significant fluctuations, these stocks are best suited for long-term investors who can ride out the volatility for eventual returns.
• Risk-tolerant Investors: The automobile sector’s sensitivity to economic cycles, regulatory changes, and technological advancements requires a higher risk tolerance. If you’re comfortable with the potential for significant swings in stock performance, this sector might be for you.
• Tech-savvy Investors: With the rapid evolution of electric vehicles (EVs) and autonomous driving technologies, investors with an interest in and understanding of these advancements could find the automobile sector particularly engaging and potentially rewarding.
• Dividend-seeking Investors: Many established automobile companies offer dividends. Investors looking for regular income in addition to capital appreciation may find attractive opportunities within this sector.
• Sustainability-focused Investors: The shift towards EVs and more sustainable automotive solutions offers a unique opportunity for investors focused on environmental sustainability to contribute to and benefit from this transition.

Future Projection of Auto Sector Stocks

The future of the auto sector stocks does seem promising! And guess what, it’s not just a hunch – there are some major policies in place that are adding an extra edge.

First up, we’ve got the PLI scheme, which stands for the Production Linked Incentive scheme. This nifty policy is designed to give a boost to the auto sector by offering incentives to manufacturers. These incentives can really amp up their production and make their stocks look more appealing. So, with the PLI scheme in play, auto sector stocks might have a bright future ahead.

Then there’s the National Electric Mobility Plan (NEMP) – sounds techy, right? This plan is all about promoting electric vehicles (EVs), which are becoming the new cool kids on the block. With the world shifting towards greener alternatives, companies investing in EVs might see a surge in demand, and that could translate to promising stock performance.

Lastly, we’ve got the National Auto Policy. This policy is like a roadmap for the auto industry, guiding it towards growth and innovation. When companies align with this policy, it can lead to better strategies, better products, and you guessed it, better stock performance.

To Wrap It Up…

In a nutshell, auto stocks India offer a mix of thrilling prospects and potential pitfalls. Staying aware of the risks and seeking expert advice can help you make an informed and confident investment decision. And guess what? You can easily invest in a readymade bundle of car stocks or automobile stocks via smallcase. So, don’t miss out and start investing today!

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