India is home to nearly 18% of the world’s population, and their needs are catered by constant innovation in products. Transportation vehicles may be one such innovation, which has revolutionised the world. Specifically, motor vehicles have played a significant role in providing two-wheeler or three-wheeler passenger vehicles for the commute.
Along similar lines, the automobile industry in India has significantly evolved in India. Its share in the national Gross Domestic Product (GDP) has grown over the years. Moreover, the recent Electric Vehicle (EV) wave in the country may make it an attractive avenue for investments in India.
Investors with a small purse size may also seek investment in the sector with the help of penny stocks. The concept of penny stocks is not properly clear among investors and may hinder investment opportunities. Let’s explore this concept and some of the best automobile penny stocks in India.
All about penny stocks
Usually, the stocks pricing low and having significantly low market capitalisation are considered as penny stocks. These companies may be newly listed or have low market value. Investors usually neglect these stocks due to their volatile nature and low popularity.
If an investor analyses them thoroughly and makes an informed decision, they can make a potential investment. Investors can get exposure to diverse companies and industries with low investment costs. Moreover, if these stocks are undervalued, they may also generate potential returns in the long term.
Know more: Penny Stocks
Automobile sector in India
This sector is a cohort for varied activities like designing and manufacturing automobiles. Apart from core vehicles, it is also extended to maintenance of its spare parts. India has gained the popularity to be one of the leading manufacturers in the global automobile industry. The following data indicates how Indian automobile production has experienced an uptrend in recent years:
| Year | Automobile production in India (in millions) |
| FY 2020-21 | 22.65 |
| FY 2021-22 | 23.04 |
| FY 2022-23 | 25.93 |
| FY 2023-24 | 28.43 |
The future growth of the Indian automobile industry looks promising owing to the EV revolution in the country, export targets, government support and overall industry momentum.
An insightful read: Automobile Industry in India
Automobile penny stocks in India
These five penny stocks (given below) are based on the lowest priced (ascending order) as of November 25, 2024. However, they should be analysed by the investors before making an investment decision.
The company’s shares are priced at ₹17.3 as of November 25, 2024, on the National Stock Exchange (NSE). It has been operating in the renewable energy area and has been extended to EV sales since October 2021.
Its subsidiary, Urja Digital World Ltd, is handling the EV production and sales. In June 2023, it signed an agreement with TESLA for the supply of batteries. Moreover, it seeks to promote EV battery services with this collaboration. The company is debt-free, but its moderate to low financials may be considered while investing.
- Hindustan Motors Ltd
The company is famous for manufacturing automotive spare parts and forged parts. Its shares are priced at ₹21.5 as of November 25, 2024, on the NSE. It manufactures products such as gearboxes, wheel hubs, manifolds, cylinder boxes, etc. The company has declining financial profits for the past few years. However, its debt has reduced significantly in recent years.
- Bikewo Green Tech Ltd
Established in 2006, this company is quite young in the market. Its shares are priced at ₹28.7 as of November 25, 2024, on the NSE. It manufactures electric two-wheelers. Its dealership model is spread across 34 showrooms in the country.
It was listed recently in September 2024, and since then, its stock has experienced a downside of nearly 40%. However, the company is new and is established in the niche EV sector, which has prospective growth aspirations.
Incorporated in 2018, the company has spanned rapidly across 19 states. It recently got listed on the exchange in July 2024. As of November 25, 2024, its share price is ₹40.2 on NSE. Investors may reap the benefits of this young company in the long term. It designs and manufactures over 23 two-wheeler EV models and earns a significant part of its revenue from Northern India.
- Wardwizard Innovations and Mobility Ltd
Joy E-Bikes and Vyom Innovations are the popular brands of this company. Operating through its cohort of 750+ dealers all over the nation, the company has a potentially strong positioning in the customer’s minds. As of November 25, 2024, its share price is ₹43.2 on NSE.
It has recently expanded in the three-wheeler segment. However, investors should analyse this investment in overall aspects as promoter holding in the company is decreasing.
Comparative analysis
| Particulars(Amount in ₹ crores) | Urja Global Ltd | Hindustan Motors Ltd | Bikewo Green Tech Ltd | Tunwal E-Motors Ltd | Wardwizard Innovation and Mobility Ltd |
| Revenue | 54.01 | 4.91 | 24.92 | 104.60 | 5009.83 |
| Networth | 174.5 | 29.26 | 35.10 | 89.53 | 6573.00 |
| P/E* (in times) | 442.9 | 11.07 | 22.42 | 18.8 | 47.02 |
| Net Profit Margin | 4.59% | -18.7% | 6.70% | 11.29% | 4.59% |
| Operating Margin | 5.73% | -36% | 11.4% | 17.09% | 13.85% |
*P/E: Price to Earning Ratio
Bottomline
The automobile industry may experience a potential rise in the upcoming years, and investors with a low corpus can become a part of this growth with automobile penny stocks in India. EV companies are gradually gaining the automobile market, and this can be a significant point for investor’s consideration. However, the benefits of penny stocks may be accompanied by some risks. Therefore, investors should holistically understand their investment.
Check this out! Best Auto Stocks to Invest in India for 2024
FAQs
- What comes under the automobile industry in India?
The activities such as designing and manufacturing motor parts are categorised under the automobile industry in India. It includes a wide range of activities, from ancillary services and products to auto-making. Usually, the companies making motor vehicles like cars, trucks, buses, etc., are significant contributors to the sector.
- What is the role of the automobile industry in India?
India is undergoing a dynamic period with major evolutions in the automobile industry in recent years. It contributes significantly to the nation’s GDP. Moreover, the recent EV wave can become a crucial turning point for the industry. It also provides employment to a large share of the population directly or indirectly.
- Which is the top automobile stock in India?
The top stocks are based on the investor’s financial objectives. Some of the top auto companies listed in the market are Mahindra and Mahindra, Maruti Suzuki, Tata Motors, etc., based on their market capitalisation. Selecting the suitable stock may differ for every investor and they should analyse the companies holistically.
- What is a penny stock?
Investors with a small investing corpus may find penny stocks lucrative. These are stocks of companies with considerably low market capitalisation and market price. They are considered highly risky due to their volatile nature but may provide potential returns if they are undervalued in the market.
- What are the pros of penny stocks investment?
Penny stocks are usually perceived by investors to be only risky. However, if an investor makes an informed decision with a holistic analysis, they can benefit from the same. They can provide desired diversification with significantly low investment costs. Moreover, if the stocks are undervalued, they can generate multi-bagger returns over the investment period.
