The Indian automotive industry is on the cusp of a massive change, spurred by the sudden uptake of electric vehicles (EVs) and changing consumer demands. The sector is seeing an upsurge in EV take-up, with new models being introduced by companies and the government providing incentives for cleaner transport, a recent report said.
In spite of these developments, the auto industry has not been doing well in recent times. The S&P BSE Auto Index lost about 5.4% year-to-date as of March 21, 2025, capturing the struggles of auto stocks.
This decline offers a possible opportunity to investors since current valuations can provide good points of entry into the sector.
In this backdrop, it’s wise to look at the five cheapest auto stocks in India. To determine those stocks, we’ve concentrated on firms with a market cap of more than Rs 500 crore and a positive EV/EBITDA multiple.
The EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization) ratio is an important tool in analyzing a company’s valuation. It is the comparison of the value of the company, including debt, with its earnings from operations, which gives an idea of its health and profitability.
Let’s have a glance on cheapest five stocks in India.
#1 Tata Motors
Tata Motors Group is a major global auto manufacturing company. As part of the prestigious multi-national conglomerate, the Tata group, it produces a large and varied range of cars, sports utility vehicles, trucks, buses and defence vehicles for the globe.
It has India, the UK, South Korea, South Africa, China, Brazil, Austria and Slovakia operations via a robust global network of subsidiaries, associate companies and Joint Ventures (JVs), including Jaguar Land Rover in the UK and Tata Daewoo in South Korea.
The current valuation of Tata Motors stands at an EV/EBITDA multiple of 5.2x, which reflects comparatively favorable pricing versus peers. It is currently trading almost at par with its 10-year median EV/EBITDA of 5.5x.This implies that the stock could be undervalued.
Over the last one year, its share price has tumbled 28.3%.
Tata Motors Share Price Performance in 2025
Tata Motors has been upgraded to a BUY rating from ADD by ICICI Securities with a target price of Rs 831 per share, implying 18.3% upside from its market price as on 21 March 2025.
The brokerage foresees a rosy future for Tata Motors. The company is set to make new launches such as the Harrier EV and Sierra ICE, in addition to repositioning models such as Curvv and Altroz. These will all help deepen its penetration of the domestic market.
In the JLR business, the US and Middle East markets are performing well and there are signs of recovery in the EU. There is a clear plan in Tata Motors to manage the transition between ICE and EVs on a demand-driven basis.
The company also aims to be net debt-free by FY26. ICICI Securities feels that these measures put Tata Motors on a solid footing despite existing sector stress.
The firm has growth prospects as it gets set to introduce the Range Rover Electric by end-2025, followed by additional EVs in 2026. The management is optimistic about remaining resilient by investing in both ICE and EV platforms.
In India, Tata Motors is looking to gain from EV market growth, supported by its diversified portfolio and robust ecosystem. Its established EVs and growing footprint in Tier 2 and Tier 3 cities add to its strength. The company is also working closely with the government to increase charging infrastructure.
#2 Force Motors
Force Motors was founded in 1958, is the flagship company of the Abhay Firodia group.
The firm deals in the production of completely vertically integrated light and small CVs, multi-utility vehicles, and agricultural tractors, which it exports to several nations of the Middle East, Asia, Latin America, and Africa. It was referred to as Bajaj Tempo until 2005.
Force Motors is trading on an EV/EBITDA multiple of 10.1 times, placing it among the better-valued players in the automobile industry. It is currently trading slightly lower than its 10-year median EV/EBITDA of 12 times. This valuation indicates the stock is not very pricey.
In the past one year, its stock price has gained 17.7%.
Force Motors Share Price Performance in 2025
Force Motors is increasingly heading towards a future driven by clean fuel technologies, digitisation, and shifting consumer behaviour. In FY24, the company has launched a fresh line of BS VI Stage II-compliant vehicles in evidence of its preparedness to deal with strengthening emission norms.
It has since then pursued with a focus on operational excellence, cost effectiveness, and innovation of products. Being debt-free in its balance sheet and possessing steady profitability, Force Motors is optimally poised to implement its vision of strategic excellence effortlessly.
In 2024, the company revealed a 3–4-year Rs 2,000 crore investment plan in which Rs 200-300 crore would be dedicated to electrification. It encompassed the launch of electric versions of the Traveller, followed by the Urbania, and perhaps the Gurkha SUV. For this expansion, Force Motors has been enhancing manufacturing facilities, including commissioning a second large paint plant.
Force Motors also initiated Project DigiForce in association with EY-Parthenon — a two-year digital transformation program for the enhancement of innovation and productivity across its operations. Export markets also remain at center stage in Force Motors’ strategy as it pushes to increase international presence.
Besides its core automotive business, Force Motors ventured into hospitality through the opening of a luxury resort at Khandala, which was launched in FY23 and is now slowly settling down. The venture is the manifestation of the company’s desire to create long-term value in all fields.
#3 Hero MotoCorp
Hero Moto Corp previously referred to as “Hero Honda” is one of India’s earliest motorcycle makers. The organization began in 1984 as a Technological joint venture with Honda, Japan. Prior to this joint venture, Hero was retailing Cycles under brand name, Hero Cycles.
In 2011, Honda group sold 26% holding in the company to Munjals (promoters) and closed the JV. After closing of JV, the company’s name was modified to Hero Motocorp.
Hero MotoCorp is trading on an EV/EBITDA multiple of 11.1 times, which places it among the reasonably-valued large-cap players in the automobile space. It is currently trading lower compared to its 10-year median EV/EBITDA of 13.2 times. This is a reflection of both its strong market position and the gradual shift towards electric mobility.
In the past one year, its stock price has tumbled 22.4%.
Hero MotoCorp Share Price Performance in 2025
Hero MotoCorp has been assigned a BUY with a target price of Rs 5,285 per share by Axis Securities, which indicates a 45.5% appreciation from its market price as on 21 March 2025.
The brokerage envisions Hero’s future propelled by a three-pronged strategy: building its presence in the premium two-wheeler segment, expanding its electric vehicle business through the Vida V2 platform, and expanding internationally.
Hero is also consolidating its market position in the 125cc segment and enhancing its retail network with additional premium stores and EV shops. Its ongoing tie-up with Harley-Davidson and future products lend additional momentum to its long-term positioning.
Hero MotoCorp is concentrating on implementing its 2030 strategy based on four pillars — expansion of its core business, success in the premium space, leadership in EVs, and revenue diversification. The company intends to expand its EV portfolio, increase premium offerings, and enhance rural market penetration.
It is also updating retail formats such as Hero 2.0 and Premia to promote brand visibility and consumer experience. Product launches in the future in the motorcycles, scooter, and EV segments are poised to contribute towards future growth. Management feels its robust financial foundation will facilitate investment and execution on an accelerated path.
#4 Ashok Leyland
Ashok Leyland is the group’s flagship Company with a long presence in the domestic medium and heavy commercial vehicle (M&HCV) industry.
It is one of the most completely integrated manufacturing companies having a strong brand and well-diversified service and distribution network in the country and has a presence in 50 countries, the headquarter of which is in Chennai.
They operate driver training centers in all over India and have trained more than 8,00,000 drivers to date.
Ashok Leyland is available at an EV/EBITDA multiple of 11.3 times, which represents a fairly priced valuation. It is currently trading lower compared to its 10-year median EV/EBITDA of 13.6 times. This is due to steady investor confidence supported by its dominant position in the commercial vehicle segment.
In the past one year, its stock price has rallied 26.6%.
Ashok Leyland Share Price Performance in 2025
As per a report by Geojit Financial Services, Ashok Leyland has been given a BUY rating with a target price of Rs 251 per share, which provides a potential upside of 19% from its current market price as of 21 March 2025.
The brokerage is of the view that Ashok Leyland is poised for growth in the future, underpinned by healthy margin expansion, strong export performance, and good demand from infrastructure and rural segments.
It also points to the derisking strategy of the company through export goals and ongoing investments in future growth businesses such as its EV unit, Switch Mobility, and its defence business.
In spite of short-term headwinds, Geojit identifies long-term value supported by market share pickup, new product additions, and growing addressable markets.
Ashok Leyland is looking for medium-term growth from increases in medium and heavy commercial vehicles (MHCV) market share, growth in light commercial vehicles (LCV), and dominance in alternate fuel vehicles.
The firm has rolled out the Saathi mini-truck and is expanding its LCV market coverage from the current 50% to around 80% with multiple new launches pending. It is also ramping up its electric vehicle business through Switch India, having an order book of more than 1,800 buses and likely to be EBITDA positive in the first half of FY26.
Management is upbeat on long-term demand in defence, exports, and bus segments. The company is positive on FY26 growth, led by infrastructure outlays and replacement demand.
Leadership is of the view that India’s changing commercial vehicle cycle will act differently compared to previous cycles, with less volatility in demand trends.
#5 SML ISUZU
SML ISUZU came into existence as Swaraj Vehicles in 1983 and was promoted by Punjab Tractors with technical support Mazda Motor Corporation, Japan, and Sumitomo Corporation, Japan.
In 2004, technical cooperation agreement with Mazda lapsed 2004 and disposed its entire share with Sumitomo Corporation and during the same time it entered a technical aid agreement with Isuzu Motors.
It was renamed in 2011 as SML ISUZU and Sumitomo Corporation(Japan) and Isuzu Motors(Japan) hold 44% and 15% stake, respectively.
SML Isuzu is priced at an EV/EBITDA multiple of 11.9 times, which puts it on the fair side of the valuation band in comparison to the smaller commercial vehicle players. It is currently trading lower compared to its 10-year median EV/EBITDA of 15.8 times. This implies that the market is pricing in steady performance with growth prospects.
In the past one year, its stock price has slipped 14.3%.
SML ISUZU Share Price Performance in 2025
SML Isuzu is gearing up for long-term growth, with government-driven infrastructure expansion, enhanced highway connectivity, and rising replacement demand from ageing fleets.
The company has already started implementing its electric vehicle strategy due to global as well as domestic momentum. It launched the Hiroi.ev, an electric bus platform for intra-city transit, and is targeting to roll it out commercially in the April–June 2025 quarter. This is a tangible move towards its pledge of clean and sustainable mobility.
The company also views expansion prospects in special application vehicles such as refrigerated vans, rubbish trucks, and school buses — underpinned by increasing urbanisation and more stringent transport laws.
SML Isuzu is positioning itself for future mandates such as compulsory AC cabins by June 2025, along with investment in product design, compliance preparation, and technology upgrade.
Its export strategy involves increasing presence in the neighboring countries and accessing new overseas markets. By enhancing operational efficiency and rigorous cost management, the company hopes to enhance its competitiveness and increase market share.
Parallel to this, its parent organization Isuzu Motors also announced in 2024 a mid-term plan called “ISUZU Transformation – Growth to 2030 (IX)” that among others involves rolling out Level 4 autonomous vehicles by FY2028, enhancing connected services, and developing carbon-neutral vehicle technologies.
All these group-level initiatives are likely to facilitate and guide SML Isuzu’s transformation in the coming years.
Conclusion
While the Indian automotive industry is clearly undergoing a fundamental shift, the journey is far from linear. Rapid EV adoption, evolving consumer preferences, and regulatory tailwinds are shaping the future of mobility. Yet, despite this promising backdrop, recent stock market trends reflect a degree of investor caution, with the BSE Auto Index showing a notable decline in early 2025.
This correction in valuations opens up a potential window for long-term investors seeking quality names at reasonable prices.
However, while valuations may look attractive and growth narratives compelling, every company operates within its own set of opportunities and risks. From EV transitions to export expansions, and from operational efficiency to regulatory compliance, the road ahead is filled with both promise and complexity.
Therefore, investors are advised to conduct a comprehensive analysis of each company’s fundamentals, market positioning, and execution capabilities before making any investment decision.
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Ekta Sonecha Desai has a passion for writing and a deep interest in the equity markets. Combined with an analytical approach, she likes to deep deep into the world of companies, studying their performance, and uncovering insights that bring value to her readers.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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