Best EV Stocks in India For January 2025 Based on 5Y CAGR

India’s electric vehicle (EV) sector is witnessing swift expansion, driven by government incentives, growing environmental awareness, and technological progress. Through initiatives such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, India seeks to accelerate EV adoption, transforming its transportation system towards sustainability and innovation. In this blog, we will explore the best EV stocks for January 2025 based on 5Y CAGR.

Best EV Stocks in India Based on 5Y CAGR

Note: The stocks mentioned above have been selected and sorted based on 5Y CAGR as of December 23, 2024

Overview of 5 EV Stocks

KPIT Technologies Ltd

KPIT is a global technology company providing software solutions. KPIT enables customers to accelerate the implementation of next-generation mobility technologies with 13000+ Automobelievers across the globe, specialising in embedded software, AI & Digital solutions. During Q2 FY25, the company witnessed strategic engagements in the electric powertrain and connected domains for a leading American Car Manufacturer. For FY25, the company anticipates achieving an EBITDA Margin of over 20.5%.

Key Metrics:

• Return on Equity (ROE): 31.2%
• Return on Capital Employed (ROCE): 38.4%

JBM Auto Ltd

JBM Auto Ltd is in the automotive business that manufactures and sells sheet metal components, tools, dies & moulds, and buses including the sale of spare parts, accessories and maintenance contracts for Buses. During Q2 FY25, JBM reported a growth of 11.45% in net profit to ₹49.15 crore in the September quarter over the same quarter last year. The company had posted a net profit of ₹44.10 crore in the July-September period of FY 24.

Key Metrics:

• ROE: 15.9%
• ROCE: 14.4%

M&M Ltd 

Mahindra & Mahindra (M&M) Ltd is one of the most diversified automobile companies in India with a presence across 2-wheelers, 3-wheelers, PVs, CVs, tractors & earthmovers. M&M reported overall auto sales for November 2024 at 79,083 vehicles, including exports. In the Utility Vehicles segment, Mahindra sold 46,222 vehicles in the domestic market, a growth of 16% and overall, 47,294 vehicles, including exports. The domestic sales for Commercial Vehicles stood at 22,042.

Key Metrics:

• ROE: 18.4%
• ROCE: 13.6%

Tata Motors Ltd

Tata Motors Group is a leading global automobile manufacturer, it offers a wide and diverse portfolio of cars, sports utility vehicles, trucks, buses and defence vehicles to the world. During Q2 FY25, the company’s EBIT margin was 5.1% for the quarter, impacted by lower wholesales and increased VME, FMI and selling costs, partially offset by prioritisation of Range Rover production and material cost improvement.

Key Metrics:

• ROE: 49.4%
• ROCE: 20.1%

Ashok Leyland Ltd

Ashok Leyland is the flagship Company of the Hinduja group, having a long-standing presence in the domestic medium and heavy commercial vehicle (M&HCV) segment. Ashok Leyland CV volumes were lower by 8% Y-o-Y, in line with the industry, but were up 4% sequentially. Non-CV businesses continued to post healthy growth.

Key Metrics:

• ROE: 28.4%
• ROCE: 15%

What are EV Stocks?

The EV stocks are those companies involved in the production, manufacturing, and distribution of electric vehicles, batteries, motors, EV software, and charging stations. Electric vehicles not only offer lower fuel costs (or none at all), but they also produce significantly fewer emissions. With the Indian government prioritizing electric mobility, investors are increasingly focusing on top EV stocks in India. As the EV market continues to grow, the best EV stocks in India could become key components in shaping investment portfolios.

Factors to Consider Before Investing in EV Stock

Before investing in electric vehicle (EV) stocks, there are several important factors to consider:

1. Market Growth and Demand: Evaluate the potential growth of the EV market, including government policies, incentives, and the shift towards sustainable transportation. Look for trends in EV adoption and the growth of related infrastructure, such as charging stations.
2. Company Financials: Analyse the financial health of the EV companies you are considering. This includes revenue growth, profitability, debt levels, and cash flow. A strong financial position can help companies weather market volatility.
3. Technology and Innovation: Consider the company’s focus on innovation, such as advancements in battery technology, autonomous driving, or EV software. Companies with cutting-edge technologies may have a competitive edge.
4. Government Regulations and Support: Check the regulatory environment for electric vehicles in the country or region where the company operates. Government subsidies, incentives, and mandates to reduce emissions can significantly impact the profitability of EV companies.
5. Competition: Assess the competitive landscape. Look at how established automakers and startups are positioning themselves in the EV space. Companies with strong partnerships, production capabilities, or unique offerings may be better positioned for long-term success.
6. Supply Chain and Production Capacity: Consider the company’s ability to scale production and meet demand. Companies with efficient supply chains and the ability to manage raw material costs (such as lithium and cobalt for batteries) are crucial for sustained growth.
7. Market Sentiment and Volatility: Understand the volatility in the EV sector. The market can be highly speculative, and stock prices may fluctuate based on investor sentiment, news, and market trends.

EV Industry Overview

India has set a target to increase the share of electric vehicle (EV) sales to 30% for private cars, 70% for commercial vehicles, 40% for buses, and 80% for two-wheelers and three-wheelers by 2030. This ambitious goal aims to have 80 million EVs on Indian roads by that year.

The Indian EV battery market is expected to grow significantly, rising from US$ 16.77 billion in 2023 to US$ 27.70 billion by 2028.

Regarding infrastructure, as of February 2024, there are 12,146 operational public EV charging stations across the country, with Maharashtra leading, followed by Delhi and other states. A recent report from the Confederation of Indian Industry (CII) highlighted the need to establish at least 1.32 million charging stations by 2030 to support the rapid growth of electric vehicles, requiring over 400,000 new installations annually.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.