Top Automobile Stocks in India 2025

Auto sector stocks in India are poised to grow rapidly in the coming tech-driven phase. The companies expect high demand for vehicles and components like batteries, tires, etc. As of now, the auto sector contributes over 7.1% of the total GDP (Gross Domestic Product). However, the number is expected to increase in the coming years due to rising disposable income and technological advancements. Moreover, 

NiftyAuto was trading at 17,769.10 on 8th December 2023 and has shown robust growth to reach 23,752.40 points till 3rd December 2024. This boom made automobile stocks in India a popular investment option. 

Additionally, the government has backed this promising sector with schemes like PMP (Phased Manufacturing Programme), FAME India II, CAFE Standards, Make in India, and more. 

What are Auto Sector Stocks?

Auto sector stocks represent the equities of business enterprises involved in the manufacturing of vehicles and their components. Factors like market demand, economic stability, and fuel prices foster the growth of automobile companies in India. Urbanisation in India has played a pivotal role in the significant boom of the automobile industry over the past few decades.

The high dividend payouts and strong growth potential of the best auto stocks in India could help you make a diversified investment portfolio. But before that, you should identify the fundamentally strong shares, including efficient parameters, to give higher returns. Scroll down through this piece of research for a better understanding. 

Top 10 Auto Stocks in India

*Data is updated as of 5th December 2024

Factors Associated With Best Auto Stocks in India

Auto sector stocks in India could generate higher returns. But also comes with a sensitivity to economic cycles and demand fluctuations. Investors should consider several factors affecting the automobile industry to cope with such issues. Let’s explore them together. 

1. Government Initiatives

Auto sector stocks are backed by government schemes/initiatives. For example, AMP (Automotive Mission Plan) focuses on the industry’s goal of contributing over 12% of the GDP. To invest optimally, assess the current and upcoming schemes and their impacts on stock prices. 

2. Regulatory Frameworks

Legal authorities regulate automobile companies in India for smooth functioning and environmental considerations. These include safety measures, emission standards, and taxation. Consider the stocks adhering to such regulations and complying effectively to avoid high legal penalties. It could help you invest in growth-oriented companies in the automobile industry. 

3. Customer Choice

High carbon emissions significantly impact the environment. Thus, governments and businesses need to promote electric vehicles (EVs). Most customers are shifting their preferences towards electric vehicles, which might impact companies’ sales. Research and select the best auto stocks in India, which are well poised to adapt to the manufacturing and distribution of EVs. 

4. Technological Integration

The rapid evolution of technologies enables automobile companies to integrate tech advances into their organisational structures. However, a lack of cash flow/capital investment creates hurdles in this integration, which might impact their competitiveness. Select fundamentally strong stocks with an impressive cash flow position to gain the advantage of organisational commitments to innovation. 

5. Financial Stability

The financial health of the automobile company plays a pivotal role in its growth and expansion. Thus, assessing the cash flow, debt, profitability, turnover, and market capitalisation of automobile stocks in India is essential. Ensure that company has an strong financial position so as to sustain in the competitive business environment. 

Best Auto Sector Stocks Based on 1-Year Returns

*Data is updated as of 5th December 2024

Dividend Yield in Auto Sector Stocks in 2024

*Data is updated as of 5th December 2024

Advantages of Investing in Auto Sector Stocks 

In the long run, capital appreciation is the primary benefit of auto sector stocks in India. However, investors should be aware of the other advantages they can get from investing in automobile stocks. These include. 

• High Dividend Payouts: Automobile companies operating with large market capitalisation often announce dividend payouts for their investors. It is a kind of regular income for investors to meet their daily expenses. Investing in the best auto stocks in India could give you higher dividends than others. 

• Robust Demand: As disposable income significantly increases, the demand for automobiles rises. Middle-class people are interested in buying affordable cars, bikes, and scooters, which provides strong potential for automobile companies to generate higher profitability and sales. Due to enhanced vehicle demand, investors could take advantage of steady revenue growth and stock appreciation. 

• International Exposure: Auto sector stocks in India often expose investors to global demand for vehicles and components. This helps companies increase their sales and shield them against fluctuations in domestic demand. Invest to take advantage of the effective global presence of automobile companies. 

Risks Associated With Auto Sector Stocks

Besides high growth potential, the best auto stocks in India come with several risk factors that may impact your investment portfolio. To deal with such impacts, the risk must be identified, and mitigation strategies must be assessed significantly. 

Let’s Wrap

With a significant rise in NiftyAuto in the past year, the automobile industry has become a popular choice among investors. Auto sector stocks in India are projected to grow at an impeccable rate in the next few years. The technological innovations and promotion of electric vehicles will bring a drastic transformation in this promising sector and encourage investors to look over the companies that are adapting to such trends. 

Remember to research the best auto stocks in India with their financial parameters to assess their growth potential. This exploration could also help you choose fundamentally strong stocks to diversify your portfolio. 

FAQs

1. What are the listed automobile companies?

Ans. Here are some of the automobile companies listed on the national stock exchange in India. 

• Mahindra & Mahindra Ltd. (NSE: M&M)
• Maruti Suzuki India Ltd. (NSE: MARUTI)
• Tata Motors Ltd. (NSE: TATAMOTORS)
• Bajaj Auto Ltd. (NSE: BAJAJ-AUTO)
• Eicher Motors Ltd. (EICHERMOT)
• Ashok Leyland Ltd. (NSE: ASHOKLEY)
• Escorts Kubota Ltd. (NSE: ESCORTS)
• Atul Auto Ltd. (NSE: ATULAUTO)
• Force Motors Ltd. (FORCEMOT)
• TVS Motor Company Ltd. (NSE: TVSMOTOR)

2. How to invest in auto sector stocks?

Ans. Follow the steps mentioned below to invest optimally in the best auto stocks in India.

• Conduct research or consult your financial advisor to make an informed investment choice regarding stocks. 
• Get registered with a broker and open a demat account. 
• Place a buy order for selected auto sector stocks and execute it. 
• Track the returns in the portfolio section and wait to book profit in a timely. 

3. Is investing in auto sector stocks good?

Ans. Currently, the automobile sector is contributing around 50% of manufacturing GDP. The experts are predicting that it will increase in the coming years because of the rising demand for personal and commercial vehicles. Auto sector stocks in India are expected to face a booming situation to provide higher returns to investors. 

4. What are the best auto stocks in India?

Ans. Here are some of the auto sector stocks with high growth potential. 

*Data is updated as of 5th December 2024