Electric Vehicles (EVs). Some are calling them a seismic shift. Others are calling them a disruption.
For months now, EVs have been capturing headlines. Auto industry returns have already been significantly impacted by potential EV manufacturers.
Every type of company with a remote EV association today finds its customers. Investment in the EV space enables businesses to go into a new valuation orbit. Companies located in industries far from the automotive industry have also planned to enter the space of the EV battery.
You are not alone if you find your investment in these expensive EV stocks excessively risky. Many EV stocks have shifted to a new normal of enthusiasm for investors.
So, what has been going on with India’s main EV battery manufacturers in the meantime?
Let’s find out.
# Amara Raja Batteries
Amara Raja Batteries said that in the next five to seven years they are planning to invest around US$1 billion in capital expenditure.
For the government’s Advanced Chemistry Cell (ACC), PLI (Production Linked Incentives) scheme, the company claimed it will utilize the money primarily to build a 10-12 GWh (gigawatt hours) lithium-ion battery plant.
They are also negotiating with the government of Tamil Nadu for the construction of a battery manufacturing unit in the state as part of their objectives for expansion.
The move comes amid turmoil in the company’s home state of Andhra Pradesh, where the company is involved in a legal dispute with the government in the High Court.
The company nearly doubled its net profit to Rs 1.2 bn in the June 2021 quarter in its latest quarterly reports. Net profit margins were likewise slightly higher at 6.6%.
In contrast, the company’s stock price has remained relatively unchanged during the last year. In 2021 the stock fell 18.3%.
About the company
Amara Raja Batteries Ltd.(AMARAJABAT) engages in the manufacture, marketing, and trading of lead-acid storage batteries. It offers products under the Amaron, PowerZone, Power Stack, Amaron Volt, Quanta, QRS, and Genpro brands. The company was founded by Ramachandra Naidu Galla on February 13, 1985, and is headquartered in Hyderabad, India.
Amara Raja strengthens its position in the green energy space by launching long warranty variants of the Amaron Solar Tubular & VRLA series. The company now caters to a complete range of 2 volt & 12-volt VRLA and a tubular range of batteries to suit all applications in renewable energy space.
# Exide Industries
Exide Industries aims to use the government’s production-linked incentive (PLI) program to build a lithium-ion battery production plant in the near future, similar to Tesla’s.
When the PLI relating to the segment is announced, the company will finalize details of its cell battery production plant.
By the end of 2022, Exide also plans to start its lithium-ion battery assembly plant in Gujarat. Because of the pandemic, it had postponed plans to open the facility.
The company now has contacts to approximately 100 OEMs (original equipment menufactureres) and is testing various prototypes.
For the June 2021 quarter, Exide generated a net income of Rs 320 m. In the same quarter previous year the company posted a net consolidated loss of Rs 140 m.
The company’s shares have increased by 9.3% in the past year. But the stock in 2021 fell by 5.8%.
About the company
Exide Industries Ltd is primarily engaged in the manufacturing of storage batteries and allied products in India. The company was founded in 1946 and is headquartered in Kolkata, India.
Its subsidiary, Exide Life Insurance Company Ltd (ELI) is engaged in the business of life insurance products to the customers through various distribution channels including individual agents, corporate agents, banks, etc.
The company is the leading storage batteries manufacturer in India with leader in almost all categories in Automotive, Industrial, and submarine sectors. Presently, Automotive sector accounts for 73% of revenues of the segment, followed by industrial (26%) and submarine (1%). The industrial battery customers are primarily from power, solar, railways, telecom, UPS sectors.
In 2018, The company has entered the domestic lithium battery business by forming a JV with Leclanche SA in the ratio of 75:25.
# Tata Group – Tata Power/Tata Chemicals
Within its residential and commercial projects, Tata Power has teamed with MacroTech Developers (Lodha) to supply end-to-end EV charging stations in Mumbai and in Pune.
Tata Power will install EV charging stations in Lodha projects under this collaboration. All homeowners and visitors who are EV owners will have access to the chargers.
Meanwhile, as part of its commitment to sustainability, Tata Chemicals has started a lithium-ion battery recycling initiative.
Used Li-ion batteries will be recycled to recover precious metals like lithium, cobalt, nickel, and manganese, with a goal of recycling 500 tonnes of Li-ion batteries.
The Company recorded a multi-fold increase of consolidated net profit in its last quarter results in the amount of Rs 3.4 billion for the quarter of June 2021.
The company’s stocks increased more than 200% in the last year, and by more than 90% in 2021.
About the companies
Tata Chemicals Ltd. is a holding company, which engages in the manufacture and sale of inorganic chemicals. It operates through the following segments: Basic Chemistry Products, Consumer Products, and Specialty Products. The Basic Chemistry Products segment offers soda ash and other bulk chemicals. The Consumer Products segment includes branded salt, pulses, and spices. The Specialty Products segment consists of nutrition solutions, agri solutions, and advanced materials. The company was founded on January 23, 1939 and is headquartered in Mumbai, India.
Tata Power Co., Ltd. engages in the provision of power supply and transmission charges. It operates through the following segments: Generation, Renewables, Transmission & Distribution and Others.
The Generation segment comprises of generation of power from hydroelectric sources and thermal sources from plants owned and operated under lease arrangement and related ancillary services. The Renewables segment Comprises of generation of power from renewable energy sources i.e. wind and solar and related ancillary services. The Transmission & Distribution segment Comprises of transmission and distribution network, sale of power to retail customers through distribution network and related ancillary services.
The Others segment Comprises of project management contracts/infrastructure management services, property development and lease rent of oil tanks. The company was founded on September 18, 1919 and is headquartered in Mumbai, India.
Going forward, the company wants to increase its capacity concentration from thermal sources to clean energy sources. It aims to expand its clean and green capacity to 60% of total by 2025, 80% by 2030 and achieve carbon neutrality by phasing out of thermal projects by the year 2050.
# Hero MotoCorp
As reported by Hero MotoCorp, the company expects to introduce its first electric two-wheeler as early as March 2022. Hero has developed the electric scooter independently.
Dr Pawan Munjal, Hero MotoCorp’s Chairman and CEO, teased a pre-production prototype of the company’s future electric scooter at the company’s 10-year anniversary celebration.
The company also indicated that by the second half of next year it intends to offer a new electric scooter. It will be developed with the assistance of Gogoro, an electric vehicle company based in Taiwan.
Earlier this year, the two businesses entered into a partnership involving the implementation of battery swap technologies for upcoming electric two-wheelers.
The company has a toe-hold in the domestic electric vehicle (EV) segment with a roughly 34.6% stake in EV start up Ather Energy. Ather Energy recently unveiled its all-new electric vehicle manufacturing plant at Hosur in Tamil Nadu, spread across 123,000 square feet.
With a capacity to produce 110,000 scooters annually, the facility will serve as Ather Energy’s national manufacturing hub. The factory is supported by the government of Tamil Nadu under its EV Policy.
Apart from manufacturing EVs, the facility will also focus on lithium-ion battery manufacturing which is a key area of focus for Ather Energy going ahead. The facility has the capacity to produce 120,000 battery packs annually.
Ather Energy is the only EV OEM in India to make its own battery packs and has filed 13 patents on the design and manufacturing of the batteries.
For the quarter of June 2021 Hero MotoCorp recorded a year-on-year(YoY) net profit gain of 498% in the amount of Rs 3.7 billion.
In the last year though, the company’s shares fell 8.4% and in 2021 by 7%.
About the company
Hero Moto Corp earlier also known as “Hero Honda” is one of India’s first motorcycle manufacturers. The company started in 1984 as a Technological collaboration with Honda, Japan. Before this collaboration, Hero was selling Cycles under the brand name, Hero Cycles. In 2011, Honda group sold its 26% stake in the company to the Munjals (promoters) and ended the JV. Post the termination of JV, the name of the company was changed to Hero Motocorp.
It is the world’s largest manufacturer of 2 Wheelers, in terms of unit volumes sold by a single company in a calendar year, for 19 years in a row. In FY 20, it sold 64 lakh two-wheeler units. Sales grew at a CAGR of 39% over the past decade. The overall market share of the company in the two-wheeler segment stands at 35.7% as of FY20. The company has some strong brands under its names like Splendor, Passion, Glamour in the bike segment and like Pleasure, Maestro in the scooter segment and others, etc.
The Company has been focusing on expanding its business to EV’s for which it has tied up with Ather (in which the company owns 34.58% as of July 2020) and with HeroHatch (an internal start-up). Ather (the first Indian electric vehicle company) currently has 2 product offering- Ather 450 and Ather 450X and has also established EV charging infrastructure in Bengaluru and Chennai.
# Maruti Suzuki
Maruti Suzuki established a joint venture with Toyota to develop hybrid electric vehicles (HEVs).
When it comes to merit, the company claims that the technology has a lot to offer because it can scale up without relying on external charging infrastructure and it also reduces emissions.
Maruti Suzuki announced in a press release that some electric vehicles have a similar testing procedure, which will be evaluated along with Toyota starting next month. We aim to receive more input from consumers on usage behaviors, etc.
The company plans to procure lithium-ion battery packs from a newly formed joint venture (JV) with Toshiba and Denso as it looks to build a portfolio of hybrid cars.
It is a small operation limited to serving 20,000 hybrid cars annually. The battery in hybrid cars has a different chemical composition than that in lithium-ion batteries.
Until India’s charging infrastructure matures, self-charging systems will be required, which is why we will be employing hybrid electric vehicles.
An internal combustion engine (ICE) supplies energy in self-charging automobiles in addition to the rotation of the wheel. Vehicles powered by batteries have better mileage than those powered only by internal combustion engines (ICE).
Maruti Suzuki India recorded a net profit of Rs 4.4 billion rupees for the June 2021 quarter, compared to a net loss of Rs 2.5 billion rupees the year before.
The company’s stock has increased just 9.5% in the last year, compared to a 56% growth in the BSE Sensex.
About the company
Maruti Suzuki India Ltd. engages in the manufacture, purchase and sale of motor vehicles, components, and spare parts. It includes facilitation facilitation of pre-owned car sales, fleet management and car financing. The company was founded on February 24, 1981 and is headquartered in New Delhi, India.
A joint venture agreement was signed between the Government of India and Suzuki Motor
Corporation (SMC), Japan in 1982. The Company became a subsidiary of SMC in 2002.It is the market leader in passenger vehicle segment in India. In terms of production volume and sales, the Company is now SMC’s largest subsidiary. SMC currently holds 56.28% of its equity stake.
How you can ride the EV movement?
The hottest news today in the market is about electric vehicles. As you can see, India’s electric vehicle revolution is just getting started. In this space there is enormous wealth. But you need to identify the right EV stock to buy in order to play it accurately.
Tanushree Banerjee, Equitymaster’s Co-Head of Research, feels that the true wealth in electric vehicles lies outside the passenger car makers.
Sources: equitymaster.com, livemint.com
