Financial analysts predict that the automobile industry is bound to witness new highs in 2023. After a lull that the industry has faced for many years, this perspective is welcome as investors eye for new sectors to invest in. The facts of decreasing unemployment, increasing incomes, and the rapid growth of credit demand are likely to bring in auto sales. In this scenario, auto stocks will undoubtedly rise to the occasion, and for investors, this is a good sign. It's worth looking at aspects of the auto industry and what stocks to grab in 2023.
Before you deep-dive into investment in auto stocks, you should be aware of the automobile industry itself. The automotive sector, over the past five years or so, has been on a regressive path across most automotive segments. Data from the Society of Indian Automobile Manufacturers has been dismal with a grim performance on unit sales during the past few years.
For instance, in 2021-2022, the unit sales percentage of passenger vehicles was about 36.51%. Nonetheless, although this percentage seems low when compared to the previous years, there appears to be a glimmer of hope. In 2021-2022, the sales of passenger vehicles recorded an increase of 19.22%, and that of commercial vehicles saw a rise of 28.90% compared to previous times.
In case you are an investor looking to invest in the share market today, you may wish to invest in some auto stocks. For the years to come, automobile stocks in India are set to see a pace of growth. What are the reasons for this? Consider the following:
With the automobile industry all set to move in a forward direction, with growth estimated at a hopeful 7%, you can invest in the best automobile stocks in India through online trading channels.
In terms of its revenue, the sector of automobiles is one of the most successful in the country. Consequently, the sector has a large say in the overall condition of the Indian economy. The sector is touted to grow. Investors cannot wait to invest in this sector. Through their investment, investors get stability, development, and great returns. Here are some of the best automobile sector stocks to aim for this year:
Incorporated as far back as 1981, over the years, this car manufacturer has grown from strength to strength. It is, by all accounts, the largest manufacturer of passenger vehicles in India. It has a capacity for combined production amounting to about 2.25 million units annually. In FY22, the company had record sales at 1.65 million units, and in November 2022, it had a market share of 41.30%. Another achievement under this company’s belt is that it exports vehicles to more than 100 countries with three of its models in the top export category. With models to suit every desire, this is a company that has established a benchmark of operations in the Indian auto sector.
Among auto stocks to seriously consider for investment is a part of the group led by Anand Mahindra, Mahindra & Mahindra Ltd. This is the company that is included in the list of the largest manufacturers of vehicles in India, producing a range of vehicles from heavy commercial vehicles to SUVs and farm equipment. The company also manufactures buses. Its progress in the vehicle segment is impressive, to say the least - in FY22, the company’s 20 plants managed to generate a volume sales of 455, 570 units. Simultaneously, 354,688 units of farm equipment units were sold. M&M as a group has a broad presence with in-roads into finance, hospitality, logistics, IT and many other sectors.
A major company in the Tata Group conglomerate, Tata Motors is a top automobile producer in India. As far as automobile stocks in India go, Tata Motors may be somewhat low on the list of value, but it is a stable auto stock. The company has a strong domestic footprint and a developing international presence. One of the oldest vehicle manufacturers in India, its reputation precedes itself. It has proved its mettle time and time again, by not only serving up great and robust vehicles within the country but by extending its operations to overseas markets. The company has successfully acquired Jaguar & Land Rover and the Korean-based Daewoo. Although the company experienced heavy losses in FY19, it regained its position as it managed to get some control over commodity cost inflation and its decreasing market share. The share value is slowly, but surely, climbing once more.
Bajaj Auto manufactures two and three-wheeler vehicles and is a top contender in this vehicle industry. In FY22, the company retained a high market share in its two-wheeler segment which stood at 18.2%. With this company, more than 50% of sales are due to exports and this operational geographical diversification will take this company higher up the corporate ladder in the future.
The holding firm of the famous Royal Enfield, this company holds its own as a global leader in the two-wheeler mid-market segment. The company is at the top among auto stocks as it also manufactures buses and trucks, and performs not just sales, but distribution and customer service of Volvo within India. In FY22, the company commanded a 90% market share in the mid-weight segment of vehicles, selling 5.95 lakh motorcycles. With over 2,100 outlets, 3 plants for production, a design center in the UK, and one in India, Eicher motor has a stock value that keeps increasing. Eicher possesses a debt-free stock, the promoter holding 49.2%. Its profit margins are high and return ratios prove to be more than adequate.
When you open a demat account for investment in the stock market, you may think of finance and technology stocks to invest in first. The hype around these stocks is compelling but think of some great auto stocks too. You can also dig deep into any upcoming IPO in a bid to have diversity in your portfolio.