What is Electric Mobility Smallcase and How to invest in it? Review

Short Answer

The Electric Mobility Smallcase is a basket of stocks that are selected by Smallcase based on the goal of the Government to achieve the sale of 60-70 Lakh hybrid & electric vehicles from the year 2020. The pros & cons are evaluated of the sector and the features of this smallcase are discussed below.

Detailed Answer

What is Smallcase?

Smallcase is a venture by Zerodha - India’s Largest Stock Broker that allows investors and individual to invest in a basket of stocks and ETF’s which is oriented to a specific theme or goal.

There are many types of Smallcases available for every type of investor according to their risk profile and investment strategies. Smallcases are managed by India’s top Financial managers and SEBI registered professionals who use various algorithms and screeners to choose the best type of stocks, ETF’s and other securities according to the investment theme.

Electric Mobility Smallcase

The Electric mobility smallcase is mainly focused on the Green Energy sector or the Electric vehicle stocks or companies that are investing in Electric vehicles and that is expected to grow with the Electric evolution. This investment strategy is based on the new Government’s plans to achieve a sale of 60-70 electric and hybrid automobiles from the year 2020 onwards. It was announced in the budget of 2020.

Important Factors to Consider in Electric Mobility Smallcase

Some points that support this Investment strategy-

  • The Government of India has adopted FAME (Fast Adoption and Manufacturing of Hybrid and Electric vehicles In India) India scheme that is to support the market development & manufacturing of electric vehicles.
  • By the implementation of this scheme (FAME) the Electric manufacturers and technology development companies will see a boost in their overall sales and growth.
  • The new scrappage policy announced in the Budget 2020, of vehicles more than 15-20 years old will create new demand for private and industrial vehicles.
  • The Central Government is expected to come out with a national policy that will set some standards for the production of electric vehicles and also some incentives for the usage of electric or hybrid vehicles to the public.

All the above points are a positive factor for the electric vehicle industry. As more and more Government support and initiatives are taken to incentivize the production and development of Hybrid and Electric vehicles the ultimate cost will go down due to the larger production or “Economies of Scale”.

About the Electric Mobility Smallcase-

The “Electric Mobility” smallcase was launched on November 15th, 2017. It falls under the Equity Large & Mid Cap. It is a product by WINDMILL CAPITAL and is reviewed Quarterly. It was reviewed last on March 17th, 2020. The asset allocation of this smallcase is as following-

  • Large Cap-40.08%
  • Mid Cap-45.35%
  • Small Cap-14.57%

As the type suggests, it is a Large and Medium cap fund hence the majority of asset allocation is towards Medium & large-capitalization companies.

Weightage of stocks in this Smallcase:

The Electric Mobility Smallcase consists of a total of 13 stocks divided into a total of 9 categories. They are divided as follows-

  • Batteries- 14.54%
  • Auto Parts-21.81%
  • Industrial Machinery-7.27%
  • Two wheeler- 11%
  • Oil & Gas- refining & Marketing-7.27%
  • IT Services & Consulting- 7.30
  • Four Wheelers- 7.27%
  • Power generation & Transmission- 14.54%
  • Software Services- 9%

As seen above the highest weightage for this Smallcase is towards the Auto Parts manufacturers, Batteries, and Power Generation & Transmission. All these sectors are the core for any Electric car revolution, in the Future.

Potential of the Electric Revolution

The Electric vehicle revolution was kickstarted In the year 2013 when the government announced the (NEMMP 2020) National Electric Mobility Mission Plan. This scheme mentioned the incentivization of the Use and Production of Electric Vehicles.

Since then many companies have started focusing on this segment.

With the rising pollution & Fuel prices, this sector has seen a parabolic growth in demand from the common public. With the increasing awareness of Global Warming and Environment conservation, more and more people are opting for Electric vehicles instead of conventional Petrol & Diesel vehicles.

These were some of the positives of the EV sector. Not everything is good, there are some drawbacks as well. It is mentioned below.

Downsides of Electric Vehicles

  • Higher cost than that of Petrol & Diesel vehicles.
  • No proper charging infrastructure as of now.
  • Less penetration into the Rural areas.

Electric Mobility Smallcase Review:

By looking at the Pros and Cons of the EV sector, it can be said that Electric Vehicles are the next revolution in the Indian markets. With more and more companies wanting to make their Electric 2 & 4 wheelers there would be more competition in the market. That as a result will make the prices of EVs more attractive and affordable compared to Non Electric vehicles. This will directly impact the “Electric Mobility” Smallcase which will ultimately be beneficial for the investor.

Hence, this Smallcase can be a great option who is willing to invest in the idea of the success of Electric Vehicles in the Future. What do you think of Electric Mobility Smallcase in particular? Do share your views.

Tagged With: electric mobility smallcasesmallcaseelectric mobilitythematic investing
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