TVS Motor Achieves Record High as Positive Trend Continues

TVS Motor Achieves Record High as Positive Trend Continues Image/Mint_Print

VoM News Desk | October 12, 2023 | 05:45 PM IST | Breaking News | Follow on Google News

TVS Motor Achieves Record High as Positive Trend Continues

TVS Motor Achieves Record High as Positive Trend Continues

TVS Motor, the Indian two-wheeler manufacturer, has been on an extraordinary upward trajectory, hitting an all-time high of ₹1,599 per share during Thursday’s trading session. This impressive surge began in April and persisted through all the months until September, marking a consistently positive trend. Over this period, the company’s shares surged from ₹1,077 each to their current value of ₹1,597, reflecting a remarkable gain of 48.28%.

Remarkable Stock Performance

Zooming out, a broader view of TVS Motor’s stock reveals even more astounding growth. Over the last two years, the shares have appreciated by 184%, and over the last three years, there has been a significant increase of 237%. What makes this performance truly remarkable is when you look back to April 2020 when the stock was valued at just ₹240 per share. Since then, TVS Motor’s shares have delivered an astonishing return of 562%.

Positive Future Projections

The positive trend in TVS Motor’s stock is expected to continue, according to projections by domestic brokerage DAM Capital. They highlight the company’s steady rise in exports, dubbing it a “Structural Export Story in Making.” The brokerage underscores the company’s export volume growth, which has been on an upward trajectory for the past 5–7 years. In FY23, TVS Motor’s export volume contribution reached 29%, even in the face of global market pressures. DAM Capital predicts that TVS Motor is poised to become the top exporter with the fastest growth over the next decade, driven by a robust product portfolio, geographic expansion, and substantial improvement in brand equity across various export geographies in the last 2–3 years.

Market Share Gains and Margin Expansion

Notably, TVS Motor has been gaining market share from Bajaj Auto in various African markets over the last three years, in both two-wheelers and three-wheelers. In some countries, TVS has even surpassed Bajaj Auto to become the number one brand. Moreover, the company’s export growth has consistently outperformed the industry over the last 16 quarters by a wide margin. DAM Capital also highlights the company’s expansion plans, expecting an EBITDA margin increase from 10.1% in FY23 to 12.5% in FY25 and further to 13% in FY26. This expansion is driven by expectations of stronger export margins as the market recovers, alongside scale improvements, enhanced net pricing, and cost savings.

Leadership in the Electric Vehicle Segment

TVS Motor has achieved a significant 19% market share in the electric two-wheeler segment during H1FY24, surpassing the market share of internal combustion engine (ICE) vehicles, which stands at 16%. This indicates that the company is well-prepared for the electric vehicle transition, positioning itself ahead of its peers. The company’s focus on the future of the automotive industry is paying off, as it gains a higher market share despite lower margins in the EV business.

Bright Future with Revised Target Price

In light of these growth factors, DAM Capital has reiterated its ‘buy’ rating on TVS Motor with a revised target price of ₹3,051 per share. This valuation includes the core business at 35 times FY26E, amounting to ₹2,826, and adds ₹225 for the subsidiaries. This suggests a substantial 97% upside from the stock’s previous closing price of ₹1,550 per share.

VoM News Desk

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