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The Auto Industry as You Know It May Soon Be Gone. Here's One Stock That'll Keep You Safe.

Jun 26, 2019

Richa Agarwal, Research analyst

Last week ended with the government giving a brutal warning to top honchos of the auto industry.

In a meeting with Bajaj Auto MD Rajiv Bajaj, TVS chairman Venu Srinivasan, and Honda Motorcycle and Scooter India (HMSI) CEO Minoru Kato in attendance, the NITI Aayog functionaries asked a terse and rather sarcastic question: 'How much time do you want for the migration (to electric mobility)? 50 years, 25 years, 10 years?'

The government proposed a complete migration to electric vehicles (EVs) for new two-wheelers (sub 150cc) by 2025.

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This has made two-wheeler makers a nervous lot. They're full of reservations about this move. They've been quick to term it as impractical.

But the government is having none of it.

It has reportedly told the companies in no unclear terms that nearly six years 'are sufficient' to prepare for the change to electric mobility.

And just like that, over the last year or so, the move to EVs has gone from a distant and theoretical talk to mainstream policy with strict mandates being put in place.

Not just two-wheelers but the entire auto industry - and the large auto ancillary industry as well - is a nervous lot these days.

Not surprising, the government think-tank, NITI Aayog, has proposed to ban all petrol and diesel vehicles after 2030.

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This will cause a huge shuffle in the industry. Entire business models and supply chains - solid for decades past - will get disrupted.

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Surprisingly, the valuations of many stocks in the sector seem oblivious to the coming massive disruption.

Well, I've seen this coming for a while now...

Over the last year, whenever I met an auto company management, I was sure to ask: How real is the Electric Vehicle disruption threat?

The common reply I came across was - It's more talk than a real threat.

But I wasn't buying that. I'm sure they're singing a different tune now.

EVs may take some time to displace the traditional internal combustion engine (ICE) run vehicles. Yet, the way things are going, it looks like it will happen sooner rather than later.

But no matter who wins this race (EVs or ICE), one of my carefully selected stocks from the auto sector will gain either way.

You see, the component it supplies finds application in both.

I could fill a page just naming its clients. Let's just say that it supplies to any possible auto original equipment manufacturer (OEM) that you could think of.

What makes it so unique and critical for its clients?

Strong technical support with focus on quality, low costs, and most importantly, logistic support.

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The manufacturing facilities are spread across India, close to the facilities of its clients, offering it a strong edge over its peers.

Amid the recent correction in the small cap space, the stock is down quite a bit and it's very attractive.

But this great opportunity might not last for long. Make sure you get in early to ride this great long-term bargain.

Also, as the debate heats up on who the future belongs to remember... you can be on the winning side without taking sides.

Warm regards,

Richa Agarwal
Richa Agarwal
Editor and Research Analyst, Hidden Treasure

PS: Dear reader, Richa has identified specific smallcap stocks which will benefit immensely in the upcoming EV revolution. But you will need to buy these stocks before their prices run up. Find out more here...

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2 Responses to "The Auto Industry as You Know It May Soon Be Gone. Here's One Stock That'll Keep You Safe."

C.A.

Jun 28, 2019

PLease ask the functionaries at Niti Aayog a terse and rather sarcastic question: 'How much time do you want to provide plain drinking water (to the Indian people)? 50 years, 25 years, 10 years?'

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chandrakant

Jun 26, 2019

is govt is in full mood that close two wheeler and four wheeler in our country. how many country in world has been able to shot to electricity and does people have that money to put in place recharging station and who will do investment.and most important do India have that kind of electricity connection all over India and power to supply to those station, people should now develop better bullock cart so that if this is imposed compulsory, we should think of alternative way of transport, i do not know how few minister thinks what is right and wrong for country and people , it does not mean that thay have come power thay can do what they like , they basically forgetting it Indian voters who bring them to power , they can not impose thing that is not practical. yes pollution control is needed but there are many better ways. god save country from such impracticable suggestion

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