EV policy boost: Nomura sees gains for Tata Motors, M&M, Ather, Sona BLW

The latest recommendations by the Parliamentary Committee on EV policy reforms (PM E-DRIVE) could boost Tata Motors, M&M, Ather, and Sona BLW, said analysts at Nomura

Nomura on India auto stocks: The Parliamentary Committee’s latest industry report on electric vehicles (EVs), which pitches for policy support for EVs beyond two-wheelers and three-wheelers, to accelerate India’s clean mobility transition on a wider scale could unlock investment opportunities in the auto and auto ancillary sector, according to analysts at Nomura.

 

In its recent sector report, the brokerage said the panel pushed for a long-term EV policy framework via PM E-DRIVE, with a sharper focus on localisation, charging infrastructure and fiscal support -- measures that could improve adoption visibility over the next few years.

 

“The PM E-DRIVE scheme runs from 2024 to 2028 with a total outlay of ₹10,900 crore and focuses on incentivising EV adoption across segments while also supporting ecosystem development such as charging infrastructure and testing facilities,” Nomura said in its report.

 

 

From an investment viewpoint, the brokerage sees opportunities in Tata Motors, M&M, Ather, and Sona BLW Precision Forgings (formerly Sona Comstar) among others.

 

What are the latest EV policy recommendations?

The latest recommendations for the PM E-DRIVE policy focus on expanding incentives under existing schemes, accelerating charging infrastructure deployment, and reducing import dependence by strengthening domestic manufacturing.

 

Noting that the existing framework is skewed toward e-2Ws and EV 3Ws, the latest parliamentary report recommends accelerating the implementation of e-trucks and e-ambulances by setting “clear timelines” and ensuring timely deployment of e-buses after tender finalisation by enforcing stricter implementation timelines.

 

That apart, the report noted that EV adoption in 4Ws has been gradual, but the penetration levels remain modest mainly because of the affordability gap.

 

To address this issue, the committee has proposed introducing a targeted and time-bound consumer incentive mechanism for EV 4Ws, which could be structured around parameters such as battery capacity, vehicle efficiency and price caps.

 

Meanwhile, the parliamentary committee has extended incentives for EV 2Ws, 3Ws, and e-carts until March 31, 2028.

 

Thresholds for PLI schemes

The current thresholds for the PLI scheme, according to the committee, were stringent as they required OEMs to have minimum global revenues of ₹10,000 crore and fixed-asset investments of ₹30,000 crore.

 

“This could limit participation from emerging domestic manufacturers and EV startups,” it said.

 

To tackle this, the committee recommended introducing more flexible or differentiated eligibility criteria for high-potential domestic players while maintaining financial safeguards.

 

“A relaxation of these criteria could benefit our coverage company Ather Energy (Buy), which currently does not qualify for the PLI scheme due to the stringent thresholds,” Nomura said.

 

Supporting EV infrastructure

Lastly, the committee recommended reviewing the EV charging infra subsidy structure and introducing greater support for private charging infrastructure; and reviewing the gap between the approved subsidy outlay for battery manufacturing capacity and the actual utilisation of funds so far along with strict audits.

 

Auto stocks: Which company stands to benefit?

Nomura believes the recommendations could be positive for companies with early investments in EV platforms, battery technology and supply chains.

 

Among automakers, Nomura likes Tata Motors (Neutral) given its strong lead in India’s passenger EV segment. The company’s established product portfolio and expanding charging ecosystem position it well to capitalise on any demand acceleration.

 

Mahindra & Mahindra (Buy) could also gain as it scales up its EV SUV pipeline.

 

In the two-wheeler segment, Nomura said the relaxation in PLI eligibility norms could be a significant positive for Ather Energy.

 

“Ather has strong credentials to get included under the PLI scheme as it is the leading EV-2W startup in India with a strong focus on engineering and R&D. As the company is currently loss-making, additional 13-18 per cent incentives under PLI may help it to accelerate development of new products and technologies,” Nomura noted.

 

That apart, the brokerage sees faster penetration of EVs to be positive for Sona BLW Precision Forgings (Buy), followed by Uno Minda (Buy).    ===============  Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.