Shares of TVS Motor Company hit a new high of Rs 1,187.70, gaining 4 percent on the BSE in intra-day trade on Tuesday on expectations of strong earnings growth, led by recovery in domestic two-wheeler volumes. The stock surpassed its previous high of Rs 1,106.80, touched on Friday October 14.
So far in the month of October, TVS Motor has outperformed the market with an 8 percent gain, after the company said it had a strong start to the festive season and demand is expected to pick up further this year. In comparison, the S&P BSE Sensex was up 2.8 percent in the last 11 trading sessions in the current month.
In September, TVS Motors’ volumes grew 9 percent year-on-year (YoY) to 379,011 units, beating analyst estimates, due to better-than-expected volume in the domestic market. In the international market, the company said there has been a slight improvement, however, the challenges of recession and high inflation continue. Management is optimistic that sales force will continue to improve.
Analysts at Emkay Global Financial Services expect TVS Motor to post double-digit volume growth in FY23E and market share gains in both, domestic and overseas markets.
Despite the recent rise in prices, the expectation of volume growth remains at double digits for the upcoming Diwali festival. Inquiries and bookings are increasing for E-2Ws, given state government incentives and reasonable cost of ownership. Marketers expect major OEMs to have a larger stake in EVs, given the quality/safety issues facing startups, the brokerage firm said in an auto sector update.
TVS Motor has listed a range of proposals in the 5-25KW categories over the next two years, targeting segments such as premium scooters, high-performance sports motorcycles, passenger space, the delivery market and the 3Ws.
Meanwhile, the TVS Motor board is scheduled to meet on November 4, to consider and approve the unaudited financial results for the quarter ended September 2022 (Q2FY23).
Analysts at Prabhudas Lilladher expected a 15 percent increase in revenue due to a 13 percent increase in volumes. TVS has benefited from its premium bike/scooter portfolio. The brokerage firm expects a margin expansion of 70bps QoQ led by pressure on emerging commodity costs.
In the past six months, TVS Motor’s share price has appreciated 72 percent, compared to a 3 percent rise in the S & P BSE Sensex. It has rallied 118 percent from its 52-week low of Rs 513 on March 7, 2022.