Sharekhan Recommends To Buy This Automobile Stock For 19% Returns

The automobile industry has been under immense pressure for more than 1 year, due to the lockdowns and the pandemic. However, intensified vaccination drive and relaxations norms have eased the industry to some extent. Hence, the renowned brokerage firm Sharekhan in a recent report has recommended to buy stocks of TVS Motor with a potential return of 19.3%, within a target period of 1 year.

Target Price

The Current Market Price (CMP) of TVS Motor is Rs. 673. The brokerage firm, Sharekhan Recommends has estimated a Target Price for the stock at Rs. 803. Hence the stock is expected to give a 19.3% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 673
Target Price	Rs. 803
1 Year returns	19.30%

Company performance

TVS has gained market share in the two-wheeler industry, with the number rising from 11.8% in FY2014 to about 14.2% in H1FY2022, and the company strengthened its presence in the high realization scooters and motorcycles category with a share of mopeds falling from 41% in FY2014 to 26% in FY2021. Driven by a strong volume outlook and margin expansion, Sharekhan expects robust earnings growth at 51.9% CAGR during FY21-23E.

Comments by Sharekhan

Sharekhan said, "The company has laid down a strategy to boost its export volumes over the next 4-5 years through consolidating its position, where the company presence and entering new markets. It expects scooter demand to be robust and should revert to category share of 30-32% in the industry." The firm added, "TVSM and BMW Motorrad have further deepened their relationship and extended partnership to jointly develop new platforms."

About the company

TVS is the third largest two-wheeler manufacturer in India. Their Motorcycles and scooters contribute 40% and 33% of volumes, respectively. TVS also manufactures 3Ws (5% of overall volumes) mainly for the export market. TVS is focusing on the overseas market that contributes to about 25% of overall volumes. The company continues to focus on EVs and has shared its plan to invest Rs. 1,000 crore in EVs.

Disclaimer

The above stock was picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

(Also read: Sharekhan Recommends To Buy This Manufacturer Stock For Good Returns)