Why TVS Motor Share Price Is Rising?
Recently, automobile industry stocks have been rallying like there is no tomorrow. This following a decline in the prices of metals, crude oil, and other commodities.
One stock in particular, TVS Motor, has seen a large gain.
TVS Motor Company produces a diverse range of two-wheelers, ranging from mopeds to racing-inspired motorbikes to three-wheelers.
Shares of TVS Motor are presently trading at Rs 835, up from Rs 740 a month ago, an 11% increase.
Earlier this week, TVS Motor surpassed its 52-week high of Rs 813, set on 9 November 2021. It hit a new high of Rs 835.
Let's take a look at the reasons why TVS Motor Company has recently come in to the limelight...
#1 Earnings effect
TVS Motor's net profit for the financial year 2021-22 surged 18% to Rs 728.4 crore.
Revenue from operations increased 24% to Rs 20,791 crore.
The company's two and three-wheeler sales climbed 8% to 0.03 million units.
In the overseas market, two-wheeler sales were 1.09 m units in financial year 2022. For the first time ever, the company reached this milestone.
TVS Motor's Q4 results were also good. Profit after tax of Rs 2.7 bn was in line with what the market was expecting.
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 mentioned below helped improve the quarterly results.
* An enhanced product mix in the business
* A boost in exports
* Cost-cutting tactics
#2 Sectoral effect
Until a few months ago, the automobile sector was in a downturn and on the verge of collapse owing to the Russia-Ukraine conflict.
Russia and Ukraine are important suppliers of core parts to the chip manufacturing sector. The already dire situation of shortage of semiconductors got even worse.
Russia was especially active in supplying metals such as palladium to the semiconductor industry. Ukraine supplied particular gases for chip manufacturing, such as neon and helium.
Automobile manufacturers' share price and sales suffered as a result of the chip shortage.
In addition to this, metals and crude oil prices were also increasing due to the imposition of new Western sanctions.
The tables seem to have turned now. The automobile sector is looking up now that the consequences of the war have begun to fade.
Metal and crude oil prices have fallen, allowing these companies to breathe easier.
As a result, automobile stocks are on the rise.
The S&P BSE Auto Index is presently trading at 26,968, a 24% increase from the price of 21,669 in March 2022.
It hit a seven month high recently and traded at its highest level since 18 November 2021.
#3 EV effect & increased sales numbers
Electric vehicles (EVs) are the latest market trend that does not appear to be going away anytime soon.
In this domain, significant advances are continuing to take place. The government has also established the goal of transforming India into a worldwide manufacturing powerhouse.
TVS Motor announced big plans to expand its electric two-wheeler capacity and charging infrastructure a few months ago.
In addition, by developing new products, EVs would be introduced to worldwide markets in the near future.
That day may come very soon!
Recently, the company announced plans to launch new automobiles ranging from 5 to 25 kilowatts.
They have already unveiled three variations 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 conclusion of current fiscal year 2021-22.
It announced that it will partner with BMW's motorbike brand to develop EVs in India.
In 2021-22, TVS Motor Company has sold over 10,000 electric vehicles.
It is also in advanced negotiations with private equity companies for financing of Rs 4,000 - 5,000 m for its expansion plan.
With the reopening of schools and colleges, it is projected that EVs will witness an increase in demand from students, working women, and the rest of the market.
TVS hopes to enhance its EV revenue share by leveraging on the growing worldwide demand for electric vehicles.
It is doubling down on electric vehicles as India focuses on decreasing vehicular pollution in cities and reducing reliance on fossil fuels in the face of rising fuel prices.
These reasons combined have sent the shares of TVS Motor to their all-time high level.
How TVS Motor share price has performed recently
Shares of TVS Motor have risen by 30% on a YTD basis.
TVS Motors share price has a 52 week high quote of Rs 835 touched on 29 June 2022 while it hit a 52 week low of Rs 495.95 on 24 August 2021.
As of 31 March 2022, promoters owned 50.81% of the firm, while FIIs owned 11.97% and DIIs owned 28.51%.
At the current price, TVS Motors trades at a PE multiple of 53.55 and a price to book value multiple of 8.65.
There is no surprise here 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 located in Chennai, Tamil Nadu, India.
It is the largest company in the TVS Group in terms of size and turnover.
It is India's third largest motorbike manufacturer.
TVS Motor is also India's second largest exporter, with sales to over 60 countries.
The firm operates four production facilities, three in India and one in Indonesia.
Disclaimer: This article is for information purposes only. It 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.)
