Recently, auto stocks have rallied like there’s no tomorrow. This follows a drop in prices for metals, crude oil and other commodities.
One stock in particular, TVS Motor, saw a significant gain.
TVS Motor Company produces a diverse line of two-wheelers, ranging from mopeds to race-inspired motorcycles to three-wheelers.
Shares of TVS Motor are currently trading at Rs 835, up from Rs 740 a month ago, an increase of 11%.
Earlier this week, TVS Motor surpassed its 52-week high of Rs 813, set on November 9, 2021. It hit a new high of Rs 835.
Let’s take a look at why TVS Motor Company has been in the limelight lately…
#1 Effect on earnings
TVS Motor’s net profit for the fiscal year 2021-22 jumped 18% to Rs 728.4 crore.
Operating revenue increased by 24% to Rs 20,791 crore.
Sales of the company’s two- and three-wheelers climbed 8% to 0.03 million units.
In the overseas market, sales of two-wheelers were 1.09 million units in fiscal 2022. For the first time, the company has passed this milestone.
TVS Motor’s fourth quarter results were also good. The after-tax profit of Rs 2.7 billion was in line with market expectations.
In addition to the big gains, TVS Motor also rewarded shareholders with a stock dividend of Rs 3.75 per share.
The company’s management stated that the reasons mentioned below helped to improve the quarterly results.
* An improved product mix in the company
* A boost to exports
* Cost reduction tactics
#2 Sector effect
Until a few months ago, the automotive sector was in decline and on the verge of collapse due to the Russian-Ukrainian conflict.
Russia and Ukraine are major suppliers of critical parts for the chip manufacturing industry. The already dire situation of shortage of semiconductors has further worsened.
Russia was particularly active in supplying metals such as palladium to the semiconductor industry. Ukraine has supplied special gases for making chips, such as neon and helium.
Automakers’ share price and sales have been hurt by the chip shortage.
On top of that, prices for metals and crude oil have also increased due to the imposition of new Western sanctions.
The tables seem to have turned now. The automotive sector is recovering now that the consequences of the war have begun to fade.
Prices for metals and crude oil have fallen, allowing these companies to breathe easier.
As a result, auto inventories are on the rise.
The S&P BSE Auto Index is currently trading at 26,968, a 24% increase from the price of 21,669 in March 2022.
It recently hit a seven-month high and traded at its highest level since November 18, 2021.
#3 EV effect and increased number of sales
Electric vehicles (EVs) are the latest market trend that doesn’t seem to be going away anytime soon.
In this area, significant advances continue to take place. The government has also set itself the goal of transforming India into a global manufacturing powerhouse.
TVS Motor announced major plans a few months ago to expand its electric two-wheeler capacity and charging infrastructure.
Moreover, by developing new products, electric vehicles would be introduced to global markets in the near future.
That day could come very soon!
Recently, the company announced plans to launch new automobiles ranging from 5 to 25 kilowatts.
They have already unveiled three versions of the iQube, an electric two-wheeler with a range of 140 km on a single charge.
TVS has also expanded iQube’s presence to 33 cities by the end of the current 2021-22 fiscal year.
It has announced that it will partner with motorcycle brand BMW to develop electric vehicles in India.
In 2021-2022, TVS Motor Company sold over 10,000 electric vehicles.
It is also in advanced negotiations with private equity firms for funding of Rs 4,000-5,000 million for its expansion plan.
With the reopening of schools and colleges, it is expected that electric vehicles will see an increase in demand from students, working women and the rest of the market.
TVS hopes to increase its share of electric vehicle revenue by tapping into the growing global demand for electric vehicles.
It doubles down on electric vehicles as India focuses on reducing car pollution in cities and reducing dependence on fossil fuels in the face of rising fuel prices.
These combined reasons propelled TVS Motor shares to an all-time high.
How TVS Motor Stock Price Has Been Moving Lately
TVS Motor shares rose 30% on a YTD basis.
TVS Motors share price hit a 52-week high of Rs 835 on June 29, 2022 while it hit a 52-week low of Rs 495.95 on August 24, 2021.
As of March 31, 2022, Promoters owned 50.81% of the business, while FIIs owned 11.97% and DIIs owned 28.51%.
At the current price, TVS Motors is trading at a PE multiple of 53.55 and a price-to-book multiple of 8.65.
It is not surprising that TVS Motors has maintained its position among the best players in its segment.
About TVS Engines
TVS Motor Company is a global Indian motorcycle manufacturer located in Chennai, Tamil Nadu, India.
It is the largest company of the TVS group in terms of size and turnover.
It is India’s third largest motorcycle manufacturer.
TVS Motor is also India’s second largest exporter, with sales in over 60 countries.
The company operates four production sites, three in India and one in Indonesia.
Disclaimer: This article is for information only. This is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)