India's Top EV Battery Makers are set for Sky High Returns

A couple of months ago, I wrote about the Top 5 Indian EV Battery Makers to Watch Out for.

I discussed the triggers of the EV battery rush in India and provided a snapshot of this space.

However, since then, the excitement in this space has quadrupled.

Companies that are in sectors far removed from the auto industry have also made plans to enter the EV battery space.

So, what have India's leading EV battery makers been up to in the mean time?

Let's find out.

#1 Amara Raja Batteries

Amara Raja Batteries announced that it plans to invest about US$1 bn in capital expenditure over the next five to seven years.

The company said it will largely use the investment for a 10-12 GWh (gigawatt hours) lithium-ion battery facility under the Advanced Chemistry Cell (ACC), PLI (Production Linked Incentives) scheme of the government.

It's also in talks with the Tamil Nadu government for setting up a battery-making unit in the state as part of its expansion plans.

The move comes amid trouble in its home state of Andhra Pradesh where the company and the government are locked in a legal battle in the High Court.

In its latest quarterly results, the company's net profit almost doubled to Rs 1.2 bn for the June 2021 quarter. Net profit margins also came in marginally higher at 6.6%.

However, shares of the company have stayed almost flat in the last year. The stock is down 18.3% in 2021.

#2 Exide Industries

Exide Industries said it plans to set up a Tesla-style giga factory for lithium-ion batteries in the near future using the government's production-linked incentive (PLI) scheme.

The company will finalise details of its cell battery-making facility once the PLI related to the segment is announced.

Exide is also planning to launch its lithium-ion battery assembly factory in Gujarat by end of the financial year 2022. It had delayed plans to bring the facility on-stream due to the pandemic.

The company already has tie-ups with around 100 OEMs (original equipment manufacturers) and is carrying out the testing for different prototypes.

Exide posted a consolidated net profit of Rs 320 m for the June 20211 quarter. The company had reported a consolidated net loss of Rs 140 m in the same period last year.

Shares of the company are up 9.3% in the last one year. However, the stock is down 5.8% in 2021.

#3 Tata Group - Tata Power/Tata Chemicals

Tata Power has partnered with MacroTech Developers (Lodha) to provide end-to-end EV charging stations in all its residential and commercial projects across Mumbai and Pune.

Under this partnership, Tata Power will install EV charging stations at Lodha developments. The chargers will be accessible to all residents and visitors who are EV owners.

Meanwhile, Tata Chemicals has launched a lithium-ion battery recycling initiative, as part of its commitment to sustainability.

The company aims to recycle 500 tonnes of used Li-ion batteries, to recover valuable metals such as lithium, cobalt, nickel, and manganese.

In its latest quarterly results, the company reported a multi-fold jump in consolidated net profit at Rs 3.4 bn for the June 2021 quarter.

The stock of the company is up over 200% in the last year, while in 2021, it's up by over 90%.

#4 Hero MotoCorp

Hero MotoCorp said it plans to launch its first battery-powered two-wheeler in March 2022. The electric scooter has been developed independently by Hero.

Chairman and CEO of Hero MotoCorp, Dr Pawan Munjal, teased a pre-production prototype of the upcoming electric scooter during the company's tenth-anniversary celebration.

The company also said that it plans to launch a second electric scooter by the second half of next year. It will develop it with the help of Taiwan-based EV manufacturer Gogoro.

The two brands had announced a partnership earlier this year which involved the use of battery swapping technology in upcoming electric two-wheelers.

Hero MotoCorp reported a 498% year on year (YoY) rise in net profit at Rs 3.7 bn for the June 2021 quarter.

However, shares of the company have fallen 8.4% in the last year and 7% in 2021.

#5 Maruti Suzuki

Maruti Suzuki announced it's developing hybrid electric vehicles (HEV) with Toyota.

The company said the technology has a lot of merit as it can scale up without the dependence on external charging infrastructure and offers a good reduction in emissions as well.

In a press release, Maruti Suzuki said,

• There is a joint testing program of some electric vehicles; these prototypes will be tested starting next month along with Toyota. We are planning to get more consumer feedback on usage patterns, etc.
  
  Till the time charging infrastructure grows in India you will need self-charging machines, so towards that, we will be using hybrid electric vehicles.

In self-charging cars, an internal combustion engine (ICE) provides energy to the batteries besides wheel rotation.

Since batteries power the car, such a vehicle delivers higher mileage than a pure ICE car.

Maruti Suzuki India reported a net profit of Rs 4.4 bn for the June 2021 quarter against a net loss of Rs 2.5 bn in the year-ago quarter.

The shares of the company have risen only 9.5% in the last year against a 56% rise in the BSE Sensex.

How can you ride the EV trend?

Electric vehicles are the hottest story in the market today.

There is huge wealth to be made in this space. But to play it right, you must find the best EV stocks to buy.

Equitymaster's Co-Head of Research, Tanushree Banerjee, believes that the real wealth in electric vehicles is far from the passenger car manufacturers.

To know where the real opportunity lies, you can check out her article in one of the recent editions of Profit Hunter: The Real Wealth in Electric Vehicles.

You can also join her India Revival group on Telegram to get the latest updates.

And if you would like to invest in the EV space, Richa Agarwal, editor of the smallcap recommendation service, Hidden Treasure, recently recommended a proxy play on India's EV revolution.

Hidden Treasure subscribers can read the report here. If you are not a subscriber, here’s where you can sign up.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...