Brokerage Views: New EV Policy Brings Auto, Component Makers In Focus
Here's what brokerages say about the buzzing stocks of the day.
A new electric vehicle policy was notified by the Narendra Modi government last week, with the objective to bring the likes of Tesla to Indian shores. Premium EV makers coming to India will up the ante for incumbents like Tata Motors and Mahindra & Mahindra, said Citi and Bernstein in their recent note.
More EV players setting shop in India could mean an upside for auto component manufacturers, says Nomura. Meanwhile, Bernstein adds that supply chain partners will benefit if the nation become an export hub.
Meanwhile, Citi sees an 19.25% upside to Shree Cement from current levels with a price target of Rs 30,000. The brokerage upgraded its rating on the stock to 'buy' from 'neutral'.
Citi Too Sees Tougher Competition For Tata, M&M EVs
- No risks for the likes of Tata Motors and Mahindra & Mahindra, for the time being.
- New EV policy makes competitive landscape tougher for future electric cars by Tata Motors, M&M.
- Indian OEMs will need to offer an attractive value proposition to premium EV buyers.
- New EV policy is likely to result in attractive opportunities for some of the Indian auto part makers.
EV Policy To Boost Auto Component Makers, Says Nomura
- Auto component makers—Sona Comstar, Motherson Sumi, etc.—stand to benefit from the entry of the likes of Tesla.
- New EV policy to support the entry of Tesla in India, some other global OEMs.
- The policy will promote investments in the EV auto components ecosystem, charging infra.
- Entry of Tesla may help to build aspirations for EVs in India.
- Sona Comstar, Sansera, Motherson Group to benefit from Tesla’s entry in India.
Tesla's Entry To Impact Incumbents, Says Bernstein
- Traditional players have been slow to address the opportunity.
- Challenge has been the lack of tech know-how and supply chain.
- India is price-sensitive market, over 70% of vehicles sold below $15,000.
- Demand for vehicles priced more than $30,000 is less than 3% of the market.
- Tesla's probable entry can be a negative for incumbents Maruti, Mahindra & Mahindra, Tata Motors and Hyundai.
- No immediate stock price impact because not an immediate challenge; price points high initially.
- Supply chain partners like Sona Comstar to benefit if India becomes hub for export.
Jefferies Sees Electric 2W Prices Rising Up To Rs 12,000
- Higher subsidies boosted EV sales from 0.4% in fiscal 2021 to 5% in second half of fiscal 2023.
- Two-wheeler demand continues to shift towards EV at gradual pace.
- Share of EVs in two-wheeler sales rebound at 4-6% over 2 years.
- Electric two-wheeler prices are estimated to rise in the range of Rs 7,000-12,000.
- Maximum incentives to 3.33 lakh units; similar to registrations in November to February.
- Production-linked incentives can help cushion reduced FAME incentives.
- Policymakers prefer incentives for manufacturing/ capability over demand creation
- EVs to form 5%/7%/9%/19% over FY24/25/26/30
Emkay Prefers To Play The PV Story Via Motherson Sumi
- The policy reasonably protects Indian OEMs largely operating below the $35,000 mark.
- Affirms view that disruption risk is abating in two-wheelers with stagnating penetration levels and consolidation.
- Passenger vehicles are entering phase of uncertainty around slowing growth.
- Emerging disruption risks with potential entry of newer players like Tesla, Vinfast, BYD, etc.
- Prefer to play the PV story through Motherson Sumi Wiring
Citi Upgrades Shree Cement To 'Buy'
- Citi upgraded Shree Cement from 'neutral' to 'buy', at a price target of Rs 30,000 (19.25% upside to current level).
- Rating upgrade on similar Ebitda per tonne and volume growth expectations.
- Firm expects double-digit volume growth in the current and next fiscal.
- Expects Q4 volumes to be slightly higher on sequential basis.
- Estimate FY25/26 Ebitda per tonne at Rs1,320/Rs1,350.
Motilal Oswal Maintains Sell On IGL
- Motilal Oswal retained its 'sell' rating on Indraprastha Gas, with Rs 350 target price.
- Despite end of Delhi infrastructure exclusivity in 2025, competition from new players is low.
- RoE beyond metros stand less attractive.
- APM gas allocation shortfall to continue.
- With lower spot gas prices, industrial segment prospects remain robust
