Lately, auto industry stocks have been rising like there’s no tomorrow. This after a fall in the prices of metals, crude oil and other commodities.
One stock in particular, TVS Motor, has posted large gains.
TVS Motor Company produces a wide variety of two-wheelers ranging from mopeds to race-inspired motorcycles to tricycles.
Shares of TVS Motor are currently trading at Rs 835, up from Rs 740 a month ago, up 11%.
Earlier this week, TVS Motor surpassed its 52-week high of Rs 813, set for November 9, 2021. It hit a new high of Rs 835.
Let’s take a look at the reasons why TVS Motor Company has recently come into the limelight…
#1 Income Effect
TVS Motor’s net profit for the 2021-22 fiscal year increased by 18% to Rs 728.4 crore.
Operating income increased by 24% to Rs 20,791 crore.
The company’s two- and three-wheeler sales rose 8% to 0.03 million units.
In the overseas market, sales of two-wheelers in fiscal year 2022 reached 1.09 million units. The company reached this milestone for the first time.
TVS Motor’s Q4 results were also good. The profit after tax of Rs 2.7 billion was in line with what the market expected.
In addition to the strong gains, TVS Motor has also rewarded shareholders with an equity dividend of Rs 3.75 per share.
The company’s management said the reasons below have improved its quarterly results.
† An improved product mix in the company
† A boost in exports
† Cost-saving tactics
#2 Sector effect
Until a few months ago, the auto sector was in a downward spiral and on the brink of collapse as a result of the conflict between Russia and Ukraine.
Russia and Ukraine are major suppliers of core components for the chip manufacturing sector. The already dire situation of a semiconductor shortage got even worse.
Russia was particularly active in supplying metals such as palladium to the semiconductor industry. Ukraine supplied certain gases for the production of chips, such as neon and helium.
The share price and turnover of car manufacturers suffered from the chip shortage.
In addition, the prices of metals and crude oil also rose due to the imposition of new Western sanctions.
The roles now seem to have reversed. The automotive sector is looking up as the effects of the war begin to fade.
Metal and crude oil prices have fallen, allowing these companies to breathe easier.
As a result, auto stocks are rising.
The S&P BSE Auto Index is currently trading at 26,968, up 24% from its March 2022 price of 21,669.
It recently hit a seven-month high, trading at its highest level since November 18, 2021.
#3 EV effect and higher sales figures
Electric vehicles (EVs) are the latest market trend that doesn’t seem to be going away anytime soon.
Important progress is still being made in this area. The government has also set the goal of turning 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.
In addition, new product development would introduce EVs to global markets in the near future.
That day could come very soon!
Recently, the company announced plans to launch new cars ranging from 5 to 25 kilowatts.
They have already unveiled three variants 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 fiscal year 2021-22.
It announced it will partner with BMW’s motorcycle brand to develop EVs in India.
In 2021-22, TVS Motor Company has sold more than 10,000 electric vehicles.
It is also in advanced negotiations with private equity firms to finance Rs 4,000-5,000m for its expansion plan.
With the reopening of schools and colleges, EVs are expected to see increased demand from students, working women and the rest of the market.
TVS hopes to increase its EV revenue share by leveraging the growing global demand for electric vehicles.
It will double the number of electric vehicles as India focuses on reducing vehicular pollution in cities and reducing reliance on fossil fuels in the face of rising fuel prices.
These reasons together have taken TVS Motor’s shares to their all-time high.
How TVS Motor’s share price has performed recently
Shares of TVS Motor are up 30% on a YTD basis.
The share price of TVS Motors has a 52-week high of Rs 835 which hit 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 company, while FIIs owned 11.97% and DIIs owned 28.51%.
At its current price, TVS Motors is trading at a PE multiple of 53.55 and a price-to-book multiple of 8.65.
It is no surprise that TVS Motors has maintained its position as one of the top players in its segment.
About TVS Motors
TVS Motor Company is a global Indian motorcycle manufacturer based in Chennai, Tamil Nadu, India.
It is the largest company of the TVS Group in terms of size and turnover.
It is the third largest motorcycle manufacturer in India.
TVS Motor is also India’s second largest exporter, with sales in more than 60 countries.
The company has four production facilities, three in India and one in Indonesia.
Disclaimer: This article is for informational purposes only. It is not a stock recommendation and should not be treated as such.
This article is from Equitymaster.com
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)