Best Battery Sector Stocks in India for 2022: Across all major automotive markets globally, we are witnessing a transformative shift to electric mobility. Even during the ongoing Covid-19 pandemic, while vehicle sales have dropped significantly in many of these markets, the uptake of electric vehicles (EVs) has bucked the trend in 2020. India also is keen on following this global trend.
In this article, we take a closer look at the best battery sector stocks in India for 2022 which will benefit from the EV boom. Keep Reading to find out!
Table of Contents
Battery Industry in India
Today, batteries represent 40-50% of the costs in a typical compact class electric car’s bill of materials, compared to 30-40% costs in the case of conventional powertrains. The lithium-ion batteries market in India is expected to grow significantly in the next five years.
A report by JMK Research estimates the annual lithium-ion battery market in India to increase at a CAGR of 37.5% to reach 132 GWh in 2030. The cumulative lithium-ion battery market size is estimated to increase from 2.9 GWh in 2018 to reach about 800 GWh by 2030.
As per consulting firm Mckinsey Global new-car sales of electric vehicles (EVs), mainly battery electric vehicles (BEVs) and(PHEVs), are expected to increase from 3.5% of the global passenger vehicle sales share in 2020 to 39% in 2030 due to regulatory pressures and changing customer demand.
Impact of the Covid Pandemic on the Battery market in India
The COVID-19 pandemic has impacted the Indian EV battery market due to the disruption in the supply chain, as the country is largely dependent upon imports of raw materials such as lithium and cobalt.
The rising cases of coronavirus infections led to localised lockdowns due to which the suppliers were forced to halt their production, even though the logistics operations were severely restricted.
The decline in lithium-ion battery prices along with the emergence of electric vehicle and energy storage systems (ESS), for both commercial and residential applications, is expected to be the major driver for the lithium-ion battery market in India.
The rising concerns towards the negative impact of fuel-based vehicles on the environment are primarily augmenting the demand for electric batteries. Significant growth in the automotive industry has led to the development of various customizable options of EV batteries to be installed in trucks, buses, excavators, etc.
Apart from this, the introduction of several government initiatives for promoting the adoption of electric vehicles to curb air pollution, numerous subsidies and financial aids across India has increased the demand for EV batteries.
Market Share & Revenue Breakup of Battery Sector
For Lead-acid batteries in the Indian market, Amaron and Exide are the market leaders holding more than 70% of the market share combined. The technological maturity as well as the development of connections with OEMs, well-developed supply chains and manufacturing establishments across the country.
For Li-ion batteries, the OEMs rely on Chinese manufacturers for battery cells as well as packs as a whole.
An unorganised market takes a market share of 30-40% of the market, leaving the rest for the organised market. It has been observed that local manufacturers in the unorganised market provide a 20-30% cheaper option than branded battery products with similar configurations.
However, going forward, it is expected that the organised market will consolidate through the acquisition of small players by larger ones.
In addition, unorganized players are more likely to wind down due to stringent rules on recycling and manufacturing processes.
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Best Battery Sector Stocks in India for 2022
Let’s take a close look at some of the biggest battery makers in India and try and analyze their business prospects in the Electric vehicle Battery Segment.
Exide Industries Ltd is primarily engaged in the manufacturing of storage batteries and allied products in India. The company along with Amara Raja contributes to around 70% market share in the battery segment in India.
In 2018, the company entered the domestic lithium battery business by forming a JV with Leclanche SA in the ratio of 75:25. The JV was established to start assembling lithium-ion batteries in India in FY21 from cells sourced from overseas and then gradually set up backward integration facilities for manufacturing cells in India.
The JV was formed with a focus on e-transport, stationary energy storage systems, and speciality storage markets. As part of the JV, Leclanche will provide its know-how and intellectual property for lithium-ion cells, modules, and battery management systems, and Exide Industries will leverage its sales network and brands.
The company already has tie-ups with around 100 OEMs (original equipment manufacturers) and is carrying out the testing for different prototypes. The company has been acquiring an additional stake of Leclanche SA in the subsidiary Exide Leclanche Energy Pvt Ltd.
It acquired a 7.7% stake of its partner for 106 crores between Aug 2020 & April 2021. The company is debt-free and has a market capitalization of almost $2 Billion.
Additionally, it has recorded its highest sales in the September 2021 quarter, as compared to its previous 12 consecutive quarters. Exide is expected to make full use of the opportunity presented by the EV battery segment.
Amara Raja Batteries Limited, the flagship company of the Amara Raja Group, is the technology leader and is one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications in the Indian storage battery industry. The Company’s Industrial and Automotive batteries are exported to 32 countries across the globe.
Amara Raja Batteries has announced its plans to invest about US$1 billion in capital expenditure over the next five to seven years. The company said it will largely use the investment for a 10-12 GWh lithium-ion battery facility under the Advanced Chemistry Cell (ACC), PLI (Production Linked Incentives) scheme of the government.
Amara Raja has recently set up India’s maiden technology hub to develop lithium-ion cells, at its Tirupati facility in Andhra Pradesh. The company has invested Rs 200 million into this project.
The company has had a technology transfer agreement with the Indian Space Research Organisation (ISRO) since early 2019. In January 2019, ISRO named Amara Raja as one of the companies to which it proposed to transfer the technology to manufacture lithium-ion cells as part of the government’s effort to push electric mobility.
Under the tech transfer, ISRO will help these companies set up lithium-ion cell manufacturing units and train their staff. The cells were originally developed for use in launch vehicles and satellites.
However, none of them has started manufacturing. Amara Raja is the first to set up the development hub towards the same.
Amara Raja has one of the biggest distribution networks in India comprising more than 30,000+ retailers. The company has a 12,000 crore market capitalization with consistent sales and profits across 10+ years.
The company has not been able to grow sales at a high pace in recent years, but with the Electric vehicle Battery segment growing rapidly, the company is anticipated to be the leading player in the battery segment in the upcoming years which makes it one of the best battery sector stocks in India to watch in 2022.
3. Tata Power & Tata Chemicals
The Tata Group companies (Tata Power & Tata Chemicals) are poised to benefit immensely from the boom in the battery space for EV’s.
These companies being market leaders in their respective fields derive synergy from each other. Tata Power is building an ecosystem for EVs with the support of group companies Tata Chemicals and Tata motors. Tata Power will bring in the know-how while Tata Chemical will provide battery technology.
Tata Power has partnered with MacroTech Developers (Lodha) to provide end-to-end EV charging stations in all its residential and commercial projects across Mumbai and Pune. Under this partnership, Tata Power will install EV charging stations at Lodha developments. The chargers will be accessible to all residents and visitors who are EV owners.
Meanwhile, Tata Chemicals has launched a lithium-ion battery recycling initiative, as part of its commitment to sustainability. The company aims to recycle 500 tonnes of used Li-ion batteries, to recover valuable metals such as lithium, cobalt, nickel, and manganese.
Tata Chemicals has also signed an MoU with the Indian Space Research Organisation (ISRO) for the transfer of ISRO’s lithium-ion cell technology. It will soon start building a manufacturing facility for lithium-ion cells in Gujarat.
The Tata group company is likely to seek incentives under the PLI scheme and may also export the cells from India
The N.K. Minda Group’s flagship company, Minda Industries Limited, is one of India’s most versatile auto component producers. It is a tier-1 supplier of patented automotive solutions to OEMs and a technical leader in the automotive components business.
It is the first car component producer to supply electric vehicle manufacturers. It has already received orders to offer electric vehicle mobility components. It is primarily focused on R&D and has a prestigious roster of electric vehicle clients
Minda Corporation now has two separate divisions dedicated to EV in the form of the EME division (Electronic Manufacturing Excellence) and Spark Minda Green Mobility Company. It focuses more on power electronics. For BMS, Minda is in final talks for collaboration with major start-ups. This is expected to pave the way for more orders in the EV segment
Recently its subsidiary Spark Minda Green Mobility Solutions acquired a 26% equity stake in charging solutions startup EVQPOINT Solutions. The company believes that the strategic partnership will position Spark Minda to capitalise on the accelerating shift to electric mobility and further boost its position as a one-stop shop for comprehensive charging solutions for EVs.
Few More Battery Sector Stocks in India COMPANYMARKET CAP (RS CR)CURRENT PRICE (RS)1YR RETURNS(%)PE RATIODIVIDEND YIELD(%) Eveready Industries India Ltd.₹2,308₹318-0.75%500 HBL Power Systems Ltd.₹2,391₹86180.49%59.480.38% Indo-National Ltd.₹349₹349-36.84%333.59 High Energy Batteries (India) Ltd.₹239₹1337-36.86%13.31.14%
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Though there are considerable and multifaceted challenges that need to be addressed, India has started taking the right steps in promoting domestic battery manufacturing.
It is imperative to continue building on this through concerted efforts across the entire battery and vehicle value chains to promote the development of an entire local ecosystem together with global partners. The right measures can thus pave the road for accelerating India’s clean energy transition.
The organized sector is currently dominated by a few players who are also the best battery sector stocks in India, which includes Exide, Amara Raja, a few growing companies Luminous, HBL, Enersys and other emerging/upcoming companies include Eastman, Arise, Base Corporation and Rocket Batteries etc.
Newer applications and more demanding performance requirements encourage new technology players to enter the Indian battery market. It will create healthy competition in R&D and will open the market for advanced lead-acid batteries.
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