Best Automotive Stocks With High Dividend Yield – List And Facts
Best Automotive Stocks with High Dividend Yield: India is a global leader Automotive industry. It is the 2nd largest tractor manufacturer & 3rd largest heavy truck manufacturer. The indian automobile industry is split into Two-Wheelers, Three-Wheelers, Passenger & Commercial Vehicles. The Indian passenger car market was valued at $32.7 billion in 2021 and is estimated […] The post Best Automotive Stocks With High Dividend Yield – List And Facts appeared first on Trade Brains.
Best Automotive Stocks with High Dividend Yield: India is a global leader Automotive industry. It is the 2nd largest tractor manufacturer & 3rd largest heavy truck manufacturer. The indian automobile industry is split into Two-Wheelers, Three-Wheelers, Passenger & Commercial Vehicles.
The Indian passenger car market was valued at $32.7 billion in 2021 and is estimated to reach $54.84 billion by 2028. In this article, we take a look at the Best Automotive Stocks with High Dividend Yield and analyze their business and financials.
Best Automotive Stocks with High Dividend Yield
Let us look at some of the listed Automotive Companies and understand what it is that they manufacture. In our list, we have added both Automotive brands as well as the small ancillary Companies that supply to these big name brands. We have picked out the stocks on the basis of who pays the highest dividend as a percentage of their Current Market Price.
Best Automotive Stocks with High Dividend Yield #1 – Banco Products (India)
Established in 1961, Banco Products is a pioneer in the business of Engine Cooling systems such as Charged Air Coolers, Fuel Coolers, Oil Coolers, and AC condensers. It also manufactures De-Aeration plastic tanks, Metal Layered Gaskets, and Elastomeric molded gaskets which are used for static sealing.
In the Automotive segment, Banco supplies Passenger cars, two-wheelers, three-wheelers, utility, and commercial vehicles. In the industrial segment, the Company supplies material handling Machines, railway traction locomotives, transformer coolers, and mobile compressors.
Due to its 5 decades of industry experience and proprietary design & FEA simulation software, the Company is a reputed supplier to OEMs like Tata, Cummins, CAT, SAME, and Mahindra among others.
In the Aftermarket category, the Company supplies under the name BANCO and NRF. Banco acquired a 100% stake in Nederlandse Radiateuren Fabriek (NRF) in 2010. NRF is a leading manufacturer of automotive, industrial, railway, and marine heat transfer products in European countries.
During the year, Banco reported a Gross revenue of Rs. 2332 Cr, which increased by 19% from Rs. 1958 Cr in FY22. Net Profits of the Company increased at an even spectacular rate of 55% from Rs. 152 Cr in FY22 to Rs. 236 Cr in FY23.
With a high ROE & ROCE of 24% each, the Company trades at a Price to Earnings ratio of 17x. Along with high return ratios, the Company has a dividend yield of 3.29%, which is the highest in its industry.
In the past 5 years, Banco Products has maintained its dividend per share at an average of Rs. 14.4. The highest dividend was paid in FY19 worth Rs. 19 per share. The Company has managed to maintain a dividend payout ratio way more than 100% of its earnings per share, in the past 5 years. With share prices at rather low PEs in the 6x range, Dividend yield has climbed to as high as 31% in FY22.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹686.65 | Market Cap (Cr.) | ₹4,778.52 |
| EPS | ₹32.94 | Stock P/E (TTM) | ₹16.81 |
| ROE (%) | 23.76% | ROCE (%) | 24.17% |
| Promoter Holding (%) | 67.88% | FII Holding (%) | 2.07% |
| Dividend Yield (%) | 3.29% | Price to Book Value | 4.56 |
| Operating Profit Margin (%) | 15.61% | Net Profit Margin (%) | 10.24% |
Best Automotive Stocks with High Dividend Yield #2 – Rane Brake Lining
Rane Brake Lining is a Chennai based Automotive parts producer which pioneers in the manufacturing of brake Linings, Disc Pads, Railway brake blocks, Clutch Facings, Commercial and other Vehicle Brake Pads. The Company was established in 1929 as a distributor of automotive spare parts and was listed in the year 1936.
Later in 1987, the Company partnered with ZF and NSK and established Joint Ventures with them. This allowed the Company to diversify into power steering systems, occupant restraint systems and energy absorbing steering columns. Rane’s customers include BMW, Hyundai, ZF, Yamaha, Daimler, Kia, Bosch, Renault in the international market.
Domestic customers include the likes of Ashok Leyland, TVS, Mahindra, and even the Indian Railways. The Company earns 56% of its revenue from the sale of Disc Pads, while Brake Lining makes up 39% of its revenue. 61.5% of its total revenue is generated from sale of Original Equipment Parts, while 39% earned from selling its aftermarket parts.
Rane reported revenue from operations of Rs. 599 Cr in FY23, which rose by 18% from Rs. 506 Cr in FY22. Net Profits increased by as much as 24%, from Rs. 27 Cr in FY22 to Rs. 33 Cr in FY23. The increase in Profits came as a result of marginal drop in Employee expenses and other expenses.
Although the Company has razor thin Operating Margins of 7%, it has been able to maintain return on Equity of 13% and return on Capital Employed of 19%. The Company also trades at a Price to Earnings of 18.7x, with a high dividend yield of 2.9%.
In the past 5 years, Rane Brake Lining has maintained its dividend per share at an average of Rs. 20.5. The highest dividend was paid in FY19 & FY21 worth Rs. 25 per share. The Company has managed to maintain a dividend payout ratio of 50% on average in the last 5 years against its earnings per share.
Although the Company has a relatively high Dividend Payout ratio, its average dividend yield is slightly above 3.5% in the past 5 years.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹808.95 | Market Cap (Cr.) | ₹671.49 |
| EPS | ₹43.29 | Stock P/E | 18.67 |
| ROE (%) | 13.32% | ROCE (%) | 18.56% |
| Promoter Holding (%) | 70.93% | FII Holding (%) | 0.08% |
| Dividend Yield (%) | 2.88% | Price to Book Value | 2.62 |
| Operating Profit Margin (%) | 7.44% | Net Profit Margin (%) | 5.59% |
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Best Automotive Stocks with High Dividend Yield #3 – Hero MotoCorp
Hero Motocorp is the world’s largest manufacturer of motorcycles and scooters in terms of volume sales. Today, the Company is world renowned for its low cost motorcycles but the brand had its humble beginnings as a seller of bicycle parts. Dr. Brijmohan Lall Munjal started the business back in 1951 in Ludhiana.
What initially started as a trading business of bicycles has eventually evolved to become the largest motorcycles manufacturer. The journey of HeroMotocorp has played a huge role in India’s automotive industry, with one of the greatest technological Joint Venture, the creation of Hero-Honda.
Today, the Company has a presence in over 47 countries, with Hero Splendor being the most sold Two Wheeler in the world. The Company houses 8 manufacturing centers & 2 R&D centers, with a capacity to manufacture 95 Lakh 2-Wheelers in a year.
The Company currently has a 33.2% Two-Wheeler market share & 47% market share in the motorcycle segment. During FY23, it sold over 51.56 Lakh vehicles domestically, with 36.75 Lakh in the deluxe segment & 10.52 Lakh in the entry level segment. During FY23, Hero earned a Gross revenue of Rs. 34,158 Cr which increased by 16% from Rs. 29,551 Cr in FY22.
Net Profit increased at a slightly better rate of 20% from Rs. 2329 Cr in FY22 to Rs. 2800 Cr in FY23. With Net Profit Margins of 8.03%. the Company is able to maintain a phenomenal ROE & ROCE of 18% and 25% respectively. Trading at a Price to Earnings ratio of 29.19x, the Company currently maintains a dividend yield of 2.04%.
In the past 5 years, Hero Motocop has maintained its dividend per share at an average of Rs. 95.4. The highest dividend was paid in FY21 worth Rs. 105 per share. The Company has managed to maintain a dividend payout ratio of 63% on average in the last 5 years against its earnings per share. The Company maintains an average Dividend Yield of 4.2% in the past 5 Years.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹4,709.45 | Market Cap (Cr.) | ₹98,131.00 |
| EPS | ₹140.62 | Stock P/E (TTM) | 29.19 |
| ROE (%) | 18.37% | ROCE (%) | 24.70% |
| Promoter Holding (%) | 34.77% | FII Holding (%) | 26.79% |
| Dividend Yield (%) | 2.04% | Price to Book Value | 5.55 |
| Operating Profit Margin (%) | 13.43% | Net Profit Margin (%) | 8.06% |
Best Automotive Stocks with High Dividend Yield #4 – Bajaj Auto
Bajaj Auto is one of the oldest ventures of the Bajaj Group dating back to 1948. The Company initially started as an importer of two-wheelers back in 1948 and also launched the Vespa 150 in India, under license from its Italian manufacturer, Piaggio.
In 1971, the Company entered the three-wheeler segment, which would ease transportation of goods in the towns & cities. Later in 1977, the three-wheeler division launched the Bajaj-RE, or the infamous Auto taxi that would make short-distance traveling a breeze in India.
The brand Pulsar was launched by the Company in 2001, which became an instant success in the 2-wheeler market. Over the years, Bajaj Auto entered into partnerships with world-renowned brands like Kawasaki, KTM, and Triumph. The brand is responsible for making 100+ cc bikes at the most affordable prices.
The Company has 4 Manufacturing units across Maharashtra and Uttarakhand, which have a collective manufacturing capacity of 1.2 Lakhs Chetaks, 57 Lakh Motorcycles, and 9.3 Lakhs Commercials vehicles.
Today, Bajaj Auto is the flagship Company of the Bajaj Group and one of the largest Motorcycle and three-wheeler manufacturers in the world. The Company exports to over 79 countries across the globe, which contributes to 52.7% of the Company’s total sales.
During the year, the Company reported a revenue of Rs. 37,643 Cr, which grew by 9% from Rs. 34,429 Cr in FY22. However, the Net Profits of the Company dropped by 2% during the period from Rs. 6166 Cr in FY22 to Rs. 6060 Cr in FY23.
In January of 2024, the Management at Bajaj Auto approved a share buyback worth Rs. 4000 Cr. The Company will buy back over 40 Lakh shares at the price of 10,000 per share. Currently the share price still trades at ~20% from its buy back price. Nevertheless, the Company currently is valued at a Price to Earnings of 28x, with a dividend yield of 1.9%.
In the past 5 years, Bajaj Auto has maintained its dividend per share at an average of Rs. 120.
The Company has consistently paid dividends worth Rs. 140 from FY19-FY21. Bajaj Auto has managed to maintain a dividend payout ratio of 71% on average in the last 5 years against its earnings per share. The Company maintains an average Dividend Yield of 3.85% in the past 5 Years.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹8,013.35 | Market Cap (Cr.) | ₹2,04,212.00 |
| EPS | ₹212.50 | Stock P/E (TTM) | 27.59 |
| ROE (%) | 20.50% | ROCE (%) | 26.00% |
| Promoter Holding (%) | 54.98% | FII Holding (%) | 14.38% |
| Dividend Yield (%) | 1.94% | Price to Book Value | 6.96 |
| Operating Profit Margin (%) | 20.29% | Net Profit Margin (%) | 16.10% |
Best Automotive Stocks with High Dividend Yield #5 – Bosch
Bosch is a global leader in Technology & services operating in the mobility, Industrial Technology, Consumer Goods and Energy & Building Technology segment. Globally the Company has over 468 subsidiaries in 60 countries that employ over 4.2 Lakh individuals.
The Company was established in India in 1951. Today it employs over 39,000 individuals across 17 manufacturing units and 7 development application centers situated across the country. It also houses the largest development centre outside of Germany, for end-to-end engineering and technology solutions.
In India, the Company operates three segments: Mobility Solutions, where the Company manufactures electric powertrains and aftermarket parts for automotives. This is Bosch’s biggest segment which makes up for 88% of its revenue.
The Consumer Goods segment is the 2nd largest segment that manufacture a host of consumer durable goods like Mixer Grinders, Ovens, Gas Cooktops, Chimneys, Washers Dryers and a lot more. This segment contributes to around 10% of the Company’s revenue.
The Energy & Building Technology segment is the smallest business segment which is into taking up turnkey Solar PV Services, security systems & other energy efficient services. This contributes to about 2% of revenue.
Bosch reported an Operating revenue of Rs. 14,929 Cr in FY23, which increased by 27% from Rs. 11,782 Cr in FY22. Net Profit however grew at a slower rate of 17% from Rs. 1218 Cr in FY22 to Rs. 1425 Cr in FY23. The slow growth in Net Profits came as a result of increasing material costs.
Since a year, the stock of Bosch Ltd has rallied by 56% to reach a Price to Earnings ratio of 51x. At its current price of over Rs. 27,000 the Company maintains a dividend yield of about 1.8%. In the past 5 years, Bosch has maintained its dividend per share at an average of Rs. 203.
The highest dividend was paid in FY19 worth Rs. 203 per share. The Company has managed to maintain a dividend payout ratio of 58% on average in the last 5 years against its earnings per share. Due to its rather sky-high PE of 43x, the Company maintains an average Dividend Yield of just 1.3% in the past 5 Years.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹27,194.00 | Market Cap (Cr.) | ₹78,455.00 |
| EPS | ₹483.22 | Stock P/E (TTM) | 51.23 |
| ROE (%) | 13.22% | ROCE (%) | 17.69% |
| Promoter Holding (%) | 70.54% | FII Holding (%) | 3.55% |
| Dividend Yield (%) | 1.80% | Price to Book Value | 6.77 |
| Operating Profit Margin (%) | 14.80% | Net Profit Margin (%) | 9.25% |
List Of Other Best Automotive Stocks With High Dividend Yield
The list below puts together 10 Best Automotive Stocks with High Dividend Yield
| Name | CMP | Mkt Cap | Div Yield (%) |
|---|---|---|---|
| Banco Products | ₹686.65 | ₹4,778.52 | 3.29% |
| Rane Brake Lining | ₹808.95 | ₹671.49 | 2.88% |
| Hero Motocop | ₹4,709.45 | ₹98,131.00 | 2.04% |
| Bajaj Auto | ₹8,013.35 | ₹2,04,212.00 | 1.94% |
| Bosch | ₹27,194.00 | ₹78,455.00 | 1.80% |
| Munjal Auto Industries | ₹90.20 | ₹972.00 | 2.06% |
| Automotive Axles | ₹1,943.80 | ₹3,107.07 | 1.56% |
| Jamna Auto Industries | ₹112.75 | ₹5,097.48 | 1.49% |
| Ashok Leyland | ₹172.35 | ₹52,630.00 | 1.45% |
Read more: Top Automobile Penny Stocks In India
Conclusion
In conclusion, the article on Best Automotive Stocks with High Dividend Yield, we get to know that the Automotive industry is a low margin & high-volume industry, with razor thin margins. The industry is also extremely cyclical with any downfall sending the Companies into losses. In spite of these, the stocks on our list are able to maintain high return ratios.
The Companies here have already established enough manufacturing capacities and require comparatively low capex. Due to which, a year of growth in the industry could mean high dividends or buyback to reward shareholders. So, what do you think about the Companies on our list? Do you find greater value in these stocks? Let us know in the comments below.
Written by Nasir Hussain
By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.
The post Best Automotive Stocks With High Dividend Yield – List And Facts appeared first on Trade Brains.
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