When it comes to the topic of long term purchases- a lot of things pop into your head such as real estate, mutual funds, or maybe a car? One cannot deny the fact that the scenario for automobiles in India has changed drastically since the last two decades or so. Several vehicles are owned by a single entity and it is considered to be a measure of rank and prosperity. Every household now has a vehicle and Indian is home to 40 million passenger vehicles proving that the automobile industry has been able to provide a suitable match of a vehicle for this large population of India. The auto industry, including the auto ancillaries, is not out of the woods yet.
Before we leap forward, let us know more about these Auto-Ancillary Stocks-
Auto ancillary manufacturers are very much closely associated to Automobile Industries. The Indian Auto Ancillary enterprise is one of the most prominent and essential industries in India with tremendous growth prospects. This business is the most critical segment of the economy in a country as it bridges many services and industries. Mostly needs of Autoancillary industries come from OEM’s (Original Equipment Manufacturers) and Replacement Market.
Some Examples of Autoancillary commerce are Tyre industries, battery, brakes, and suspension, engines and auto parts, electrical parts, drive, and transmission, etc.
context to the contemporary scenario-
Auto ancillary stocks have seen a significant decline in the calendar year 2019 with some of the names falling up to nearly 60 percent. The fall occurs at the end of an overall economic strike, which has affected the complete auto segment.
Further, one needs to evaluate the exposure of these auto ancillary companies to different parts i.e. two-wheelers, passenger vehicles, commercial vehicles, tractor makers, etc. That’s because there might be segments where the strain is likely to continue and some parts where recovery is observed soon.
What are the determinants to contemplate before investing in auto stocks?
Factors to be held into deliberation while spending in auto stocks is which segment they sustain and its growth prospects. A diversified consumer base and extensive geographical ubiquity are preferable too. You can also examine the management’s background and the company’s valuation. Still, there are always some companies whose study shows good potential in the long term fundamentally.
Top auto ancillary stocks in India
The automobile industry is a vast one and also the biggest contributor to India’s GDP. There are a ton of publicly listed companies patronizing on the Indian stock exchanges.
As discussed earlier, there are a plethora of automobile areas to pick from. A seasoned investor knows the pros and cons of each stock and finances respectively. However, few stocks are well distinguished, and owing to reports, one can always say that these are worth investing in. Below given is the list of top stocks along with the features.
Eicher Motors Ltd. is one of the notable Automobile management that manufactures two & three-wheelers. Headquartered in New Delhi, it was incorporated in 1982. Their modern market capitalization reaches ₹38,530 Cr. Some of the factors that put Eicher motor stock in the top are:
- The organization has been able to produce Net Cash and the net cash flow has been improving for the last 2 years.
- Book Value per share and Annual Net Profits have also increased since the last 2 years
- This Group also has Zero Promoter Pledge
- It’s an automobile company with very Low Debt
Tata Motors Ltd. is one of the leading firms in Automobiles-Trucks/Lcv making in India. Headquartered in Mumbai, the corporation was incorporated in the year 1945. Some of the key features that can aid you to buy Tata Motors share are:
- Its shares have Growth in Net Profit with increasing Profit Margin
- The returns and the profits have been rising every quarter for the past 2 quarters
- The company has been able to produce Net Cash
Maruti Suzuki India Limited
Maruti Suzuki India Limited, previously identified as Maruti Udyog Limited, is an automobile manufacturer in India. The company is a subsidiary of a Japanese corporation, Suzuki Motor- which also held a 56.21% stake in Maruti Suzuki as of 31 December 2017. Some of the factors that make it a great company to invest in are:
- Maruti Suzuki has an extremely low debt which makes it one of the best auto stocks in India
- The firm has been able to generate Net Cash and constantly improved the net cash flow for the last two years last 2 years
- Also, the company has Zero Promoter Pledge
Honda Motor Company Ltd
Honda Motor Company is a Japanese motorcycle, automobile, aircraft, and engine production firm founded in 1948 by Soichiro Honda. Some of the features that make the stocks of this company worthwhile are:
- The company’s flagship product is the provision in engine manufacturing
- Honda motors have a diversified goods portfolio
- High brand recognition as it is one of the chief motorcycle and engine industries
- Holds a powerful space in Asia’s motorcycle sales
the road ahead-
So there are several causes why it is believed that the prospect looks big for the auto sector from a stock market perspective. There are difficulties on the ground and there is no doubt about it because lockdown means that people cannot go out and test drive their vehicles, which they want to.
Secondly, wages are also going to be rationalized a bit due to COVID and the lockdown. So there is some balancing determinant but that from a stock market outlook, the auto sector is well-positioned to kind of recoup any of the losses over the last few quarters.
Now that you have an opinion of some of the best and constant automobile shares in India, you can do some deeper analysis mapping to the ones shown here. However, be it the automobile sector or any other, it is highly suggested that spending in any kind of stocks should be accompanied by accurate research before investing. Also, patience is instrumental in the stock market during market buoyancy.
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