Tata Motors, M&M, MS: Nomura's top bets as Govt launches PM E-DRIVE

Nomura believes Govt's launch of the PM E-DRIVE scheme will extend policy support certainty for EV over the next two years

Global brokerage Nomura picked Tata Motors, Mahindra & Mahindra (M&M), and Maruti Suzuki as its preferred stock after the government's launch of the Rs 10,900 crore PM Electric drive revolution in innovative vehicle enhancement (PM E-DRIVE) scheme.

Nomura has given a 'Buy' call on Tata Motors with a target price of Rs 1,303. For M&M as well the brokerage has given a 'Buy' call with a target of Rs 3,417 and Maruti Suzuki has been given a 'Neutral' rating with a target of Rs 13,133.

"With the launch of the PM E-DRIVE scheme, the government has reinforced its commitment to electrification," said Nomura. It added government's launch of the PM E-DRIVE scheme will extend policy support certainty for electric vehicles (EV) over the next two years.

 

Out of the total amount Rs 2,679 crore has been allocated for electric two wheelers (e2Ws) and electric three wheelers (e3Ws). The scheme will cover 2.48 million e2Ws and 3,16,000 e3Ws.

Nomura estimates the incentive to stand at Rs 7,500 per electric two wheeler (e2W) and Rs 25,000 per electric three wheeler (e3W).

While there is no subsidy support for e4Ws, Nomura reckons the government’s focus on the installation of 22,000 e4W chargers is a key positive.

As per the analysts at Nomura, improved charging infrastructure will benefit Tata Motors, Mahindra & Mahindra (M&M), Maruti Suzuki, and Hyundai Motor India as it will reduce range anxiety and help build adoption for electric SUVs (eSUV).

Further, Rs 500 crore has been allocated for electric trucks and e-ambulances each, and announced a payment security mechanism fund (PSMF) of Rs 3,435 crore for 38,000 e-buses.

A payment security mechanism is essentially a payment security fund that provides interest-free capital in case of default in payments.

"The announcement of the PSMF of Rs 3,435 crore will likely reduce the financial risk for e-bus operators and may increase their ability to securitise payments, which can help keep their balance sheets lean," said Nomura.

The brokerage expects EV penetration of 24.5 per cent / 20 per cent for 2Ws/PVs by FY30F.