ICRA Limited is a leading financial/investment institutions, commercial banks and financial services company as an independent and professional investment Information and Credit Rating Agency.
ICRA forecasts that by 2030, the Indian electric two-wheeler component market could surpass Rs 1 lakh crore, with the e-passenger vehicle (e-PV) component potentially reaching at least Rs 50,000 crore in terms of revenue for ancillaries.
They attributed this growth to government subsidies, increased awareness, and a surge in product launches in the electric vehicle (EV) sector over the past two years.
Additionally, improvements in product quality, charging infrastructure, financing options, and declining battery prices are anticipated to drive further adoption of EVs across different market segments in the medium term.
As of FY2024, EV penetration in India stands at 4.7%, primarily led by electric two-wheelers (2Ws), with contributions from electric three-wheelers (e-3Ws) and electric buses as well.
Currently, only 30-40% of the EV supply chain is localized. Chassis components are produced locally with minimal technology upgrades. Over time, there has been significant localization in traction motors, control units, and battery management systems.
ICRA expects at least Rs. 25,000 crore of capex for EV components in the next three-four years, for capacity building, technology and product enhancements. About 45-50% of this, would be towards battery cells. The PLI scheme, recent e-vehicle policy and state incentives would also contribute to accelerating capex.
Shamsher Dewan, Senior VP and Group Head of Corporate Ratings at ICRA Limited, highlighted that auto ancillary companies are venturing into EV component manufacturing to capitalize on emerging opportunities. Government initiatives such as the PLI scheme and e-vehicle incentives are poised to stimulate investment activity.
ICRA predicts EV adoption might reduce aftermarket demand by lessening reliance on moving parts. However, diversifying into new products, exploring export markets, and gradually transitioning to EVs are expected to offset this impact. ICE components should still see significant demand in the medium term.
Here are a few stocks of electric vehicle component manufacturing companies that could benefit in the near term:
Sterling Tools Ltd
The company belongs to the small-cap category with a market capitalization of ₹ 1,319 crores. On Friday, Company shares closed at ₹ 366.40 a share, up 0.98 percent from the previous close price.
Sterling Tools, the second-largest automotive fasteners manufacturer and one of the largest motor control unit (MCU) suppliers for electric vehicles in India.
Sterling Tools is a pioneer in developing Automotive Microcontrollers (MCUs) in the 2W in a High-speed scooter segment (>~50 kmph) with a market share of around 50 percent market share.
Amara Raja Energy & Mobility Ltd
On Friday, Company shares closed at ₹1,403 a share, up 9.81 percent from the previous close price.
Amara Raja Batteries Limited is one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications in the Indian storage battery industry.The company exports its battery to over 50 countries worldwide.
Amara Raja Energy & Mobility Limited provides batteries for the defense sector for powering communication and surveillance systems.
Exide Industries Ltd
On Friday, Company shares closed at ₹ 527 a share, down 0.14 percent from the previous close price.
Exide is a major player in the lead-acid battery market and has plans to enter the lithium-ion battery segment for EVs, positioning itself as a manufacturer of EV battery components.
Samvardhana Motherson International Ltd
On Friday, Company shares closed at ₹ 157 a share, up 2.76 percent from the previous close price.
Samvardhana Motherson manufacturer of wiring harnesses, which are critical electrical distribution systems in vehicles, including electric vehicles
Sona BLW Precision Forgings Ltd
Sona BLW is a leading manufacturer of automotive components, including differential gears and motor components specifically designed for electric vehicles.
On Friday, Company shares closed at ₹ 664 a share, up 1.07 percent from the previous close price.
Sandhar Technologies Limited
On Friday, Company shares closed at ₹ 543 a share, up 2.18 percent from the previous close price.
Sandhar Technologies is an auto ancillary company that manufactures and supplies various components for electric vehicles, including motors, controllers, and other EV-specific parts.
Uno Minda Ltd
On Friday, Company shares closed at ₹967 a share, down 0.73 percent from the previous close price.
Uno Minda manufactures battery management systems (BMS), battery packs, and on-board chargers for electric vehicles through its subsidiary Uno Minda EV Systems Private Limited.
Gabriel India Ltd
On Friday, Company shares closed at ₹383 a share, up 1.27 percent from the previous close price.
The company supplies EV suspension components to major EV manufacturers in India, including OLA Electric, Okinawa, Ather Energy
Written by Omkar Chitnis
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