AUTOMOBILE

- Ayushi Jain

The vital task of designing, developing, marketing, producing, and selling automobiles is the primary focus of the automotive industry, which is made up of a wide range of businesses and organisations. According to revenue, the automotive industry is a significant component of the global economy. However, the industry does not exclusively encompass automobiles.

In FY21, India produced 22.65 million cars annually, with 13 million of those built between April and October 2021.

Due to India's large proportion of young people and expanding middle class, the two-wheeler category dominates the industry in terms of volume. Further supporting the sector's expansion was the corporations' rising interest in investigating rural markets.

India is a significant exporter of automobiles and anticipates rapid export development in the near term. By 2022, it is anticipated that a number of initiatives by the Indian government and significant automobile producers will position India among the top four global markets for twoand four-wheel vehicles.

The Union Budget 2022, which was presented to the Parliament by Finance Minister Nirmala Sitharaman, contains significant pronouncements that would have an indirect or direct influence on the automotive industry. Although the budget did little to help the auto industry, it did bring attention to a few other areas that might help manufacturers in other areas.

New Battery Swapping Policy

This was most likely the finance minister's major statement since a new battery swapping regulation that will help the entire EV ecosystem will soon be implemented throughout the nation. The action will enable the establishment of battery-swapping stations and technologies in the nation by the leading EV players, OEMs, and charging infrastructure businesses, enabling a shift away from ICE-powered vehicles and toward electric vehicles.

Electric Vehicles for Public Transport

The introduction of clean and electric vehicles in the commercial vehicle industry was also announced by the finance minister. The action will assist automakers in creating and manufacturing electric buses and commercial vehicles for public transportation, thereby lowering the burden on vehicles powered by fossil fuels. Additionally, public transportation using battery-powered cars will undoubtedly benefit from cheaper operating costs,

Opening R&D Defence to private auto component makers

Since private manufacturers can now submit bids for the sale of automotive components to our defence arsenal, this is most likely another significant announcement made. This action can open up a new source of income and room for expansion for manufacturers of vehicle components. However, vehicle companies like Mahindra and Tata Motors have so far been successful in providing the armed forces with their cars

Expansion of National Highways

The finance minister also announced the allocation of Rs 20,000 crores for infrastructure development, transportation of people and goods. This will also help to expand the National Highways network by 25,000 km in 2022–2023 in order to improve the state of our nation's roadways, which will increase productivity and fuel economy. Effectively, improved roads will benefit car preservation as well.

Create Demand for New Vehicles In CV Space

Budget 2022 also disclosed an allocation of Rs. 20,000 crores for infrastructure projects, generating demand for new CVs and giving the commercial vehicle category a significant boost. The investment will benefit the CV industry, particularly at this time when the industry has been severely impacted by the pandemic.

MSP payments to increase vehicle demand

Along with other incentives to help the farming industry, Budget 2022 also included a minimum support price (MSP) payment of Rs. 2.73 lakh crore, which may increase demand for automobiles in rural India. Due to the fact that rural areas account for a sizable portion of sales for two-wheeler and entry-level car manufacturers, it is anticipated that the announcement will increase the response from these areas.

Top Stocks of Automobile Industry

Maruti Suzuki India Limited, formerly Maruti Udyog Limited, is a New Delhi-based Indian car manufacturer. When it was established in 1981, the Indian government held it until 2003, when Suzuki Motor Corporation of Japan purchased it. Maruti Suzuki has a market share of 44.2 percent of the Indian passenger car market as of February 2022.

The market capitalization of Maruti Suzuki is $28 billion. From Rs. 24,034.50 crores in March 2021 to Rs. 26,749.20 crores in March 2022, net sales increased by 11.3 %.

Quarterly Net Profit increased by 51.14 % to Rs. 1,875.80 crores in March 2022 from Rs. 1,241.10 crores in March 2021.

EBITDA was 2,871.70 crores in March 2022, up 37.77 % from 2,084.40 crores in the same month the previous year.

The EPS for Maruti Suzuki increased from Rs. 41.09 in March 2021 to Rs. 62.10 in March 2022. It is currently selling at Rs 8778.05 and has generated returns of 3.33 % over the previous six months and 17.74 % over the previous twelve months.

The stock price is excessively high. It appears that the share price is constantly changing. It is anticipated to yield a 10% profit.

The Tata Group includes the global Indian automobile manufacturer Tata Motors Limited, which has its headquarters in Mumbai. The company manufactures construction equipment in addition to passenger vehicles, trucks, vans, coaches, and buses. It also creates luxury and sports automobiles. The business was established in 1945 as a producer of locomotives and was formerly known as Tata Engineering and Locomotive Company (TELCO).

Net Sales in March 2022 were Rs 17,224.61 crore, down 13.2% from Rs 19,826.57 crore in March 2021. For the three months ending March 31, 2022, Tata Motors reported a net loss of Rs 1,033 crore. In the previous year, it posted a net loss of Rs 7,605 crore. EBITDA is down to Rs. 1,850.68 crores in March 2022 from Rs. 7,156.61 crores in March 2021, a decline of 74.14 %. Tata Motors' EPS is down, at -3.63%. It is currently trading at Rs 440.20 and has returned -13.67% over the past six months and 41.89% over the past year.

Due to a global shortage of semiconductors, sales of Tata Motor's high-end Jaguar Land Rover (JLR) models have decreased significantly. Chips, microprocessors, and other miniature computing devices are semiconductors.

Conclusion

The industry's current issue must be resolved right away because it is harming both the individual companies and the stock market as a whole. The Indian economy is intended to thrive over the long term, and the Budget places a strong emphasis on infrastructure development, digitization, electrification, and ease of doing business. The battery-swapping announcement is helpful to a small group of people and is going in the correct way. However, a more comprehensive, all-encompassing approach is required to create electric mobility for the passenger vehicle market.