Here's Why This Smallcap Will Beat the Big Autos in the EV Race

Jul 16, 2019

Richa Agarwal, Research analyst

Yesterday, I wrote to you about the slowdown in auto sector.

India saw the worst quarter in two decades for auto sales volumes.

But this in an incomplete picture.

You see, this data is mostly about internal combustion engined (ICE) vehicle sales.

Here is the stat we must not ignore amid the auto sector blues.

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Sales Volumes of Electric Vehicles (EVs) in India

Sales Volumes of Electric Vehicles (EVs) in India

The sales volumes of electric vehicles (EVs) in India are up 1,255% over a year (See Chart above).

It's a data point those cynical about electric vehicle disruption will find hard to ignore.

Yes, the base is still quite low. Electric vehicles form less than 3% of the total domestic auto sales volumes at present.

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No wonder then that the big auto companies are still dragging their feet when it comes to this revolution in automobile technology.

But if the growth in EV sales continues surging at this rate (the recently announced Government incentives could give a further boost)...then a full-blown disruption for large auto players awaits.

But are there any businesses that stand to benefit from this disruption?

My latest smallcap stock pick is one. (My Hidden Treasure subscribers can access the detailed report here.)

This company is the first in India to introduce a product that offers higher power, efficiency, and reliability, in compact size to EVs.

It has already been exporting to global electric automakers for quite some time now.

The rise of EVs in India is a great incremental opportunity for this smallcap firm. That's because it will give a handsome boost to the value supplied per vehicle.

As for its clients, I can hardly think of a name that is not associated with the firm. From domestic players like Bajaj Auto, M&M, Hero, Honda, TVS, to global players like BMW and Ford, the list is long.

And the rise of electric vehicles is just a slice of the opportunity pie.

With an innovation led business model, the company is a great play on the rise of automation in vehicles. It powers the technology behind driverless cars.

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Further, with change in emission norms from Bharat Stage 4 to Bharat Stage 6, some products it supplies to automakers could more than double.

To sum up, while the conventional auto sector faces existential crisis, this smallcap firm is all set to ride the trend of rise in new age vehicles.

Now, I obviously cannot reveal the name of this company on a public platform. But the reason I am telling you this is that sometimes disruptions can be an opportunity to make extraordinary profits.

And to find those, you need to tune off the mainstream media (which by the way is crying hoarse over the monthly auto sales numbers) and instead focus on finding where the next big opportunity is.

A final word on EVs...

EVs are expected to comprise 25% of the total vehicles in India over next 10 years. I believe the real beneficiaries of this trend will be in the smallcap space. I am keeping an eye out for more such opportunities (which I will share with my Hidden Treasure members).

And you should too...

Warm regards,

Richa Agarwal
Richa Agarwal
Editor and Research Analyst, Hidden Treasure

PS: EVs aren't the only trend I'm keeping an eye on. When the markets are down, like now...small caps tend to get beaten down worse than the rest. But that also means that the profit potential when they rebound, is much better. Like the 3 stocks I now think are headed for a rebound... you can access the report containing full details here.

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1 Responses to "Here's Why This Smallcap Will Beat the Big Autos in the EV Race"

Rajeev Arora

Jul 16, 2019

A lot of infrastructure needs to be in place before it becomes a reality. There is no charging infrastructure in place in public places or homes unlike some of the other countries. The electric supply fails often which is a negative for EVs growth.

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