|»Profit Hunter by Equitymaster|
On This Day - 25 JUNE 2019
Is Your Portfolio Ready to Profit from the Electric Vehicle Disruption?
Do you believe electric vehicles could offer a solution to pollution in India?
As per Mr Srinivasan's, Chairman of TVS Motors, 'it won't make an iota of difference'.
His reason - 'the two-wheeler contribute to 20% of automotive pollution. Automotive contributes to 20% of pollution, so we are dealing with 4 % pollution.' *
Then why is the Modi government rushing the electric vehicle revolution?
I'll come to that in a minute. First, let me take you to Global Hydrocarbon Summit in March 2015. Here, Mr Modi urged all stakeholders to bring down oil and gas import dependence from 77% to 67%.
By May 2019, India's share of energy imports had jumped to 84%...Thanks to rising consumption and falling domestic production.
Now as per a survey in January 2014, two and three wheelers account for 64% of total petrol usage. Three wheelers alone comprise 6.4% of the total diesel consumed in India.
Can you connect the dots?
You see, there could be more to government's rush to electric vehicle than pollution. The real culprit could be the ever-growing oil import bill (in turn leading to the problem of twin deficits - fiscal and current account).
Even as the big companies are yet to come to terms with the changing auto landscape, a few small players are all set to milk this trend.
A case in point is a smallcap cap company - a niche leader based in Mumbai that has acquired land to make lithium ion battery pack, to support this transition.
Another smallcap firm - an auto ancillary company based in South India with 70% market share in critical product for two-wheelers, is immune to this disruption. You see the auto parts it makes find usage in both internal combustion engine (ICE) and electric battery driven vehicles. As the debate heats up on future winners - electric vehicle or ICEs, remember, with this company, you could be on the winning side without taking sides.
Lastly, it will do you little good to worry about disruption. It's a part of evolution. You can't wish it away. So, you might as well let it work for you. You could do so by betting on disruption proof stocks...And on stocks that will profit from the changing landscapes across business segments.
Watch this space for more such opportunities in small cap space.
*As told to Press Trust of India.
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...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement
Disclosure & Disclaimer: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. The Author does not hold any shares in the company/ies discussed in this document. Equitymaster may hold shares in the company/ies discussed in this document under any of its other services.
This document is confidential and is supplied to you for information purposes only. It should not (directly or indirectly) be reproduced, further distributed to any person or published, in whole or in part, for any purpose whatsoever, without the consent of Equitymaster.
This document is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity, who is a citizen or resident or located in any locality, state, country or other jurisdiction, where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject Equitymaster or its affiliates to any registration or licensing requirement within such jurisdiction. If this document is sent or has reached any individual in such country, especially, USA, Canada or the European Union countries, the same may be ignored.
This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Our research recommendations are general in nature and available electronically to all kind of subscribers irrespective of subscribers' investment objectives and financial situation/risk profile. Before acting on any recommendation in this document, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the securities referred to in this material and the income from them may go down as well as up, and subscribers may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Information herein is believed to be reliable but Equitymaster and its affiliates do not warrant its completeness or accuracy. The views/opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. This document should not be construed as an offer to sell or solicitation of an offer to buy any security or asset in any jurisdiction. Equitymaster and its affiliates, its directors, analyst and employees will not be responsible for any loss or liability incurred to any person as a consequence of his or any other person on his behalf taking any decisions based on this document.
As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
Equitymaster Agora Research Private Limited (Research Analyst) 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407