5 Undervalued Electric Vehicle Stocks to Watch Out for in 2025

The Air Quality Index (AQI) in many Indian cities has worsened in recent months, with several areas experiencing dangerously high levels of pollution, especially during the winter months.

One of the biggest factors contributing to the deteriorating air quality in India is vehicle emissions.

Enter electric vehicles (EVs).

The growing interest in green-number-plated vehicles in India is more than just a fad. It reflects a significant shift in consumer behaviour and government policy towards sustainable and eco-friendly transportation.

In addition to this, the number of fast-charging stations are increasing everywhere. Private companies and energy providers like Tata Power, Reliance, and Indian Oil Corporation (IOC) are playing a significant role in developing a widespread network of fast-charging and battery-swapping stations.

In line with this, the demand for EV stocks has surged as investors recognise the potential for significant growth in the sector.

Companies involved in EV manufacturing, battery technology, and charging infrastructure are attracting significant investor attention, bolstered by subsidies and incentives like India's FAME II scheme.

These stocks span a wide range of companies-from automakers producing electric vehicles to manufacturers of batteries, charging infrastructure, and related technologies.

So today, let's look at some of the undervalued EV stocks in India that could make big moves in 2025 and beyond.

These companies are filtered using Equitymaster's Powerful Stock Screener.

#1 Tata Motors

Tata Motors is involved in the production of a wide range of vehicles, including passenger cars, commercial vehicles, utility vehicles, electric vehicles, and defence vehicles.

The company has been constantly working to increase its EV portfolio, aiming for a 25-30% EV mix by FY25 and 50% by FY30.

Tata Motors offers a variety of EV models, such as the Tata Nexon EV, and plans to introduce more models, including the Harrier EV, Sierra EV, and further variants of Curvv by late 2025, along with premium options like electric Jaguar.

Compared to global automotive players and even its Indian peers, Tata Motors' stock valuation appears low. This could either be due to lower revenue visibility, market leadership concerns, or investor expectations that have yet to materialise.

The price-to-earnings (PE) multiple of the stock stands at 8.6x, with the industry P/E standing at 8.3x. The price-to-book value stands at 2.9x, whereas its EV/EBITDA (enterprise value/earnings before interest, taxes, depreciation, and amortization) is 5.4x.

While Tata Motors has been making strides in the EV sector with models like the Tata Nexon EV, the transition to electric mobility is still a work in progress.

Going forward Tata Motors plans to strengthen its market share in the CNG and EV segments through the launch of new products like the iCNG Nexon and the introduction of advanced technology features to meet current demand.

The company will launch 10 new EV models by FY26 as part of its mission to mainstream EVs in India.

Here's how the stock price has performed in the past 1 year.

#2 RattanIndia Enterprises

Next on the list is RattanIndia.

RattanIndia Enterprises is a diversified Indian company that operates in various emerging sectors, including EVs, e-commerce, fintech, and drones.

In July 2021, RattanIndia Enterprises acquired a significant stake in Revolt Motors, a leading Indian electric motorcycle manufacturer known for its AI-enabled electric bikes, like the Revolt RV400 which is its flagship product and India's first AI-driven electric motorcycle.

Revolt Motors has demonstrated remarkable performance in 2024. This surge is largely credited to the success of its newly launched models, the RV1 and RV1+, which are positioned as affordable, commuter-friendly electric motorcycles.

The company aims to expand its presence in the EV market by integrating cutting-edge technology and AI into its products. RattanIndia has also shown interest in developing infrastructure to support EV adoption, such as charging stations and battery-swapping networks.

Despite challenges faced by the broader electric two-wheeler (E2W) market, Revolt Motors' growth has been exceptional. The company's strategy includes expanding its dealership network, currently at 154 locations, with plans to add 14 more by the end of December 2025.

Additionally, Revolt has ventured into international markets, beginning operations in Sri Lanka in late 2024, with plans for further global expansion in 2025.

However, Revolt Motors operates in a competitive electric two-wheeler market in India, where established and new players vie for market share.

The market is predominantly scooter-focused, which poses a challenge for Revolt as a motorcycle manufacturer. Revolt's focus on electric motorcycles provides differentiation but limits its appeal in a scooter-preferred market.

Coming to RattanIndia's valuations, its PE ratio currently stands at 13.5x, which is lower than the industry average of 33.4x, indicating a relatively competitive but slightly lower positioning within its sector. The company's EV/EBITDA ratio is 10.8x.

As part of its growth strategy, RattanIndia plans to enter international markets and leverage the Revolt brand.

It's also looking to scale up charging networks and battery-swapping solutions in urban and semi-urban areas.

In the fast growing e-commerce segment, RattanIndia's focus will likely remain on strengthening Cocoblu, expanding private label offerings, and increasing its digital reach.

The company has also entered the stationary market by launching Neomate, a new stationery brand offering premium products at affordable prices through its wholly-owned subsidiary Neobrands Limited.

Here's how the stock price has performed in the past 1 year.

#3 Hero MotoCorp

Hero MotoCorp is one of the largest two-wheeler manufacturers in the world, headquartered in New Delhi, India.

The company has been focusing on EVs through its dedicated brand, VIDA, which aims to offer sustainable urban mobility solutions with features like removable batteries, fast charging, and connected technology.

The dedicated brand VIDA has sustained its 32 day festive momentum (October- November 2024) with good retail sales and an increase in market share. It achieved 11,600 retail sales during the same period.

Additionally, the ongoing VIDA network expansion, through Hero Premia and Hero 2.0 outlets, has yielded positive results.

The company has recently expanded its e-scooter lineup with the launch of Vida V2, which includes variants like Lite, Plus, and Pro, each offering varying battery capacities and features.

Hero MotoCorp is positioning Vida as a key player in the electric two-wheeler segment, competing with leading players like Ola Electric, TVS, and Ather Energy.

Coming to valuations, Hero MotoCorp trades at a PE multiple of 21.2x against the industry P/E of 47.2x.

At 21.2x its trailing twelve-month earnings, the stock doesn't look very expensive, especially when you compare it with its long-term average which is in the same range.

In addition to electric scooters, Hero is collaborating with global firms like Zero Motorcycles to innovate in the electric space. This partnership aims to combine Hero's extensive manufacturing and distribution capabilities with Zero's expertise in electric powertrains.

Going forward, Hero MotoCorp will be expanding its EV portfolio with new products in the mid and mass segments.

It has planned to leverage on its tie ups with Harley Davidson and US-based EV maker Zero motorcycles and scale up the global business. As of now, the company is present in 50 markets and looks to expand to more.

The company is also in the process of upgrading its existing showrooms so that its premium customers get a vastly superior experience.

The company's balance sheet and its cash flows remain solid as ever and all the above points show it has taken an aggressive approach towards growth.

Here's how the stock price has moved over the year gone by...

Here's something interesting... the company's stock price has gone up only about 50% in the last 10 years when even the Sensex is up a good 200%.

The world's largest motorcycle manufacturer has underperformed the Sensex and that too by a wide margin.

#4 Samvardhana Motherson

Samvardhana Motherson operates globally in the automotive and non-automotive sectors, with a strong presence in providing innovative and sustainable solutions for the automotive industry, especially in the EV space.

The company has a significant focus on EV solutions, including high-voltage wiring, battery components, and lightweight parts tailored for electric and hybrid vehicles.

Samvardhana has been increasing its manufacturing capabilities for EVs, including setting up new facilities for high-voltage components and modular platforms for electric vehicles.

One recent notable development is its acquisition of an 11% stake in REE Automotive, an innovative EV platform developer, which allows Samvardhana to manage supply chains and integrate modular EV platforms efficiently.

Coming to valuations, Samvardhana's valuation metrics indicate a moderate yet competitive position within the automotive and engineering sectors. The company's P/E ratio is approximately 31.3x at par with the industry P/E multiple of 31.4x.

As part of its broader Vision 2025 strategy, Samvardhana Motherson aims to grow its revenues to US$ 36 billion (bn), with a significant share coming from the EV sector.

#5 Tata Power

Last on the list is Tata Power.

Tata Power is one of India's largest integrated power companies and a subsidiary of the Tata Group. Established in 1915, it has a significant presence across the power value chain, including generation, transmission, distribution, and renewable energy.

Tata Power has emerged as a leading player in India's EV charging infrastructure with its extensive network of EV charging stations branded as EZ Charge.

It has also introduced the Tata Power EZ Charge app that allows users to locate nearby EV charging stations, check charger availability, and pay digitally.

As of 2024, Tata Power operates over 100,000 home chargers, more than 5,500 public, semi-public, and fleet charging points, and 1,100 bus charging stations across 530 cities in India.

Coming to its valuations, Tata Power's PE ratio currently stands at 41.4x, which is a little higher than the industry P/E of 37.5x. This suggests that the stock is trading at a premium, likely driven by growth expectations and its strategic focus on renewable energy. Tata Power's EV/EBITDA ratio is 12.5.

Going forward, the company plans to focus on ultra-fast charging technologies and battery-swapping solutions.

Additionally, it's looking at developing charging solutions for electric buses and heavy-duty vehicles. Tata Power aims to expand its network to include 200,000 EV charging points by 2030, emphasizing fast-charging and ultra-fast-charging technologies.

Here's how the stock price of Tata Power has moved in the past year.

Snapshot of Top Undervalued EV Stocks on Equitymaster's Stock Screener

Here's a table showing the above companies on various important parameters.

Conclusion

Advancements in battery efficiency, renewable energy integration, and the entry of traditional automakers into the EV space is fuelling optimism in the EV sector.

EV stocks are seen as ethical, high-growth investments, making them a focal point for retail and institutional investors alike.

Investors are also drawn to EV stocks due to supportive policies from governments worldwide, such as tax incentives, subsidies, and investment in infrastructure.

However, while the sector offers immense potential, it also faces challenges, including supply chain disruptions, battery sustainability concerns, and the need for widespread charging infrastructure, which investors should carefully consider.

Investors should also evaluate corporate governance as a key factor when conducting due diligence before making any investment in EV stocks.

For more, check out Equitymaster's stock screener and scan the best electric vehicle stocks.

Happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...