TVS Motor Company, on Wednesday, overtook Hero MotoCorp in terms of market capitalization to become the sixth largest auto company by market capitalization. The former’s cap now stands at Rs 51,681 crore to the latter’s Rs 50,951 crore. Bajaj Auto, with Rs 104,872 crore, is the only two-wheeler manufacturer in the top five.
Shares of TVS have gained 73 percent this year while shares of Bajaj and Hero have risen only 3 percent and 10 percent, respectively. While the sales, profits and market share of TVS are lower than Bajaj and Hero, there are many factors driving the company.
TVS has seen the highest earnings improvement among automakers in the past few months. The reform is expected to increase its margins significantly among peers, due to the fall in material prices. What could further help revenue is a richer product mix and premium driven benefits.
The company was able to expand its margins even in the financial year 2021-22 (FY22) despite a 24 percent jump in input costs. A high share of exports, in addition to prudent cost control and price increases, helped the company to succeed on the front line.
New launches in the motorcycle and scooter segments have helped the company increase its market share in FY22 and is expected to continue in FY23, due to its entry into new product segments. The launch of the 225cc-bike Ronin marked its entry into the cruiser motorcycle category.
Finally, its focus on electric cars, along with plans to increase production and establish a separate subsidiary, is expected to increase funding and is viewed favorably by brokerages.