This is part of a series of posts on the coming disruptions per Industry (and I’ll cover all industries, minutely, over time) and the BSE/NSE stocks that are expected to benefit from it.
Industry: Electric Vehicles ; Sector: Batteries
This post was first uploaded on 20 August 2017
We all know that the world will be running on Electric Vehicles by 2030.
Being in the stock market, we can all sense that electric vehicle car part makers will benefit heavily and considering that India’s first vehicles will roll out by 2020, it makes infinite sense to spot multibaggers in this space.
Typically, the following parts make up an electric vehicle:
- Body
- Battery
- Regenerative Braking
- Drive System
- Microcontroller
- Of course, tyres and other routine auto parts too.
We’ll do the batteries in this first installment.
About Electric Vehicle Batteries
If electric vehicles are to succeed, the batteries should help the car run longer miles long and be cost-effective.
Such batteries must power the car for a reasonable number of miles. There is already talk about developing Aluminum air batteries that will last 1,000 miles and cost the consumer about INR 3 per mile.
As technology advances, these costs will come down.
But before we experience Aluminum air batteries, we have to work with Lithium Ion batteries.
Lithium ion batteries, the first to get off the block, contain liquids, and this makes make them heavy. Sooner or later these will have to be replaced but we have to make do with them in the present.
On a side note, IBM is working on Lithium Air and other research labs are working on Aluminum air batteries that will use their respective metals as fuel. After a certain number of miles (One Aluminum Air battery lasts 1,000 miles), the batteries will have to be replaced.
So, while picking stocks, let’s focus on 2 prominent materials that will be used to manufacture EV batteries — Lithium (for the immediate future) and Aluminum (for the distant future).
Know that lithium and graphite (for the anodes) are used in Lithium Ion batteries.
Electric Vehicle Battery Stocks that can become Multibaggers
MOIL — supplies manganese which is used to make aluminum, steel and also will be a key ingredient in EV batteries.
HBL Power Systems — makes batteries for the defence and industrial sectors. Has presence in USA, Middle East and Europe. Can easily handle lithium batteries and changes in technology. Everything looks cool about it except for the fact that its price is a bloody laggard.
Hindustan Copper — mines copper and nickel, which are used in batteries
Graphite India — Graphite is used in EV batteries, but this stock has appreciated way too much
Ashok Leyland — will make electric buses and batteries in collaboration with SUN Mobility. Maybe it will take over Sun Mobility and start making batteries
Other quality battery makers like Everready, Amara Raja and Panasonic too will jump in the fray.
Eon Electric, a small company, also makes Lithium Ion batteries along with mobile parts and optic fibre cable stuff. Please study it in depth before making any decision.
Hindalco, Vedanta, National Aluminum stocks have massive potential going forward irrespective of the fact whether Aluminum Batteries are made or not because aluminum is lightweight and will be used to make the car’s body.
HEG should do well too as it is into graphite electrodes (along with power and carbon), but its share price has jumped 3 times in the last 12 months.
Rain Industries, mines carbon which is used in making many electrical accessories for EVs.
Himadri Specialty Chemicals (suggested by Geordie Job Pottas, an independent equity researcher)
You may want to look at this languishing stock that has the potential to vroooom (but I’m unsure of the management) — Orient Abrasives, which is into mining metals for creating aluminum and many components for EVs.
Further Research on EV Batteries
This is my initial research and I will add more companies as and when I come across them. If you folks come across any, feel free to comment or email me.
Finally, do your own research and consult your financial advisor before making any investment. Remember, you are responsible for your financial affairs.
Himadri Speciality Chemical
Thanks for the feedback
jbm auto
Hi Sunil,
Greta article!
If you have to pick any one stock from the above list, which one will it be. And what are you predictions for that stock for 2020.
Note: i already have considerable qty of Ashok Leyland, thus if you could advise a different share it will be great
I am nota trader, just an amateur in share market trying to learn
Good
Sunil Sir, your ideas gives me food for thought and set a tone to do extensive research on businesses before investing. Will surely let you know once I am done with through analysis of Orient abrasive.
Sir,
how about KPIT technologies in EV sector. It has a product called revolo. I think the product and the company is worth researching
Regards
Seby
twitter @josephseby78
Sir,
The following is a post in a blog:https://oscillationss.blogspot.in/2014/11/some-stocks-worth-investing-kpit_9.html
KPIT Technologies: one of the very few of Indian IT companies focusing on product based growth model rather than linear growth model wherein more employees are added to get more generic orders mainly due to cost competitiveness like our IT behemoth Infosys. However now they are also trying to change their business model. KPIT is a research driven company focusing on strong IP creation. It provides services in the areas of Integrated Enterprise Solutions, SAP and automotive segment.
Today’s vehicles are more of electronic devices with more and more of vehicle is about semiconductor Chips where millions of written codes control the way our today’s high tech vehicles function. KPIT has developed many IP based automotive solutions in the areas of in vehicle networks, body electronics, engineering design, infotainment, powertrain etc. It has also developed a component REVOLO which will convert the vehicle into Hybrid vehicle running on Gas and electricity from Batteries. It has filed 17 patents for the system and has already received four. It comes with a set of batteries, software and an electric motor which can be charged from standard electricity source. Batteries are also charged through regenerative braking system wherein electric motor rotate during braking and in process batteries are charged. The system recognize the driving pattern and start stop the power source from batteries and fuel engine as per the requirement like waiting at traffic signal.
We may be having a vehicle of higher power and strength but during normal driving in cities such a high performance engine is not required…in these situations Revolo shuts down the engine and start the battery powered motor and thus increases the fuel efficiency. As per KPIT management, Revolo can increase the fuel efficiency by 60%-80%.
Regards
@josephseby78
Hello Sir, Electric Vehicles need special chargers, typically of SAE J1772 or higher specification. Any listed manufacturer?
Many companies will enter the fray. L&T, Honeywell, GE Power, JSW Energy, etc., etc., many companies will enter and this will become a crowded space.
Hi Sunil Sir,
As many investors like me have very limited money each month and we know that management plays important role in long-term.
Could you please add one more column related to your views on management or related links in the Long Term Section.
So that we can pick one or two stocks each month for the long term.
It would be really helpful.
Thanks
Great suggestion. Only thing it will consume a lot of time, unless the stock is well known. Let me see what I can do. Thanks.
Thank you Sunil sir 🙂
Sunil Sir,
When we are moving towards EVs, charging stations are also going to mushroom. Here is one link.
https://www.tatapower.com/media/PressReleaseDetails.aspx?id=MTM5OQ==
I feel being the front runner and a leading industrial house Tata power will be a force to reckon with in EV charging stations. I think we have to consider Tata Power also in the EV sector.
Then what about M&M. they are the front runners in the country for EVs.
Twitter : @josephseby78
M&M after its Reva acquisition in the 2000s is the EV frontrunner. Honeywell, JSW Energy too will do well
Great Article to invest in share, sure future is for battery industries and many many yet to come , could you suggest any more industries will boom in near future or by 2020
Water, Blockchain (OFSS).
Maithan alloy ,himadri speciality and goa carbon
Hello,
There are many other components such as Inverter, On-board charger, E-motor, Combination of Inverter & E-Motors, High voltage Cables and connectors. Plus within the Inverters there is a high growth component called IGBTs that form about 50% of Inverter cost. Some of the international Tier 1s are Delphi, Denso, Continental, Bosch.
In addition to Bosch, any idea if are there any manufacturers of this space in India or everything is expected to be imported?
Best regards,
Mayank
Indian comapnies are making Lithium ion batteries that are suitable for electronic devices . There is no information still , that any indian company has technology to make Lithium Ion Batteries suitable enough to charge Vehicles (cars , scooters etc.,). i think it is imported as of now.
HEG , Graphite India – They make synthetic Graphite and EVs as of now are using Natural Graphite (major supplier of Natural Graphite is by country Congo) . Unless the EVs start using synthetic , then only it would help these companies.
Sir regarding hind copper. Is it’s pe ratio 95 justifiable against industry pe of 80. Do all these companies have such mammoth pe
The EV:EBITDA valuation is applied in such stocks.
Thanks Sunil, in addition I feel, it will open huge market and new frontiers for recycling as huge number of vehicles will be moved into scrap. There are lot of non-metal items which could be recycled/refurbished and reused….also a new market of smart, fully connected IOT enabled cars (Telcos)
Great Article
To counter China from monopoly in rare earth metal as Litihium, US defense is researching on alternative batteries based on Zinc. Zinc is much cheaper and readily available with high energy density.
Namaste Sunil ji.
BHEL – PEM/PA fuelcell, hydrogen
Electrotherm – carbon foam firefly batteries
Thermax – PEM fuelcell, hydrogen
Cubex Tubings – EV copper foil
Thanks for sharing
What about Exide? There are no comments about exide.. how it looks like?
Look at the bright side – we covered HEG at 1100, Rain at 130, and others