4:1 Bonus Soon, Highest 800% Dividend: Auto Stock TVS Motor Records Strong Sales; Axis Sec's Top Pick In April

Two-wheeler giant, TVS Motor Company has recorded double-digit growth in its sales numbers in March month, quarterly and full fiscal year basis. This comes ahead of the company's preferential bonus share in the ratio of 4:1 aggregating to Rs 1,900 crore. TVS is the third-largest 2-wheeler maker in the country, and is well-placed in the coming quarters. Accordingly, Axis Securities has added the stock as its top picks in April.

TVS Motor Sales:

The company's sales for March 2024 rose by 12% to 354,592 units from 317,152 units in the same month a year ago.

In terms of Q4FY24, the company's 2-wheeler sales registered a growth of 23% to 10.32 Lakh units from 8.40 Lakh units in the same quarter a year ago. Also, its three-wheeler sales were up by 4% YoY to 0.30 Lakh units in the fourth quarter of the financial year 2023-24. Total exports registered a growth of 40% with sales increasing from 1.85 Lakh units in the last quarter of FY 2022-23 to 2.50 Lakh units in the current quarter.

In the full fiscal FY24, the sales rose by 14% to 41.91 Lakh units compared to 36.82 Lakh units in FY 2022-23.

TVS Motor Preferential Bonus Share And Highest Dividend:

Last month, the company's board approved the issuance of cumulative non-convertible redeemable preference shares (NCRPS) worth Rs 1,900 crore via bonus. The ratio for the preferential bonus shares is set at 4:1.

This means that the company will issue four NCRPS with a face value of Rs 10 each for every 1 existing share having a face value of Rs 1 each. The coupon rate is fixed at 6%, while its expiry is of 12 months from the date of allotment.

Additionally, the company turned ex-dividend last week for its interim dividend of 800% amounting to Rs 8 per share. This is the highest dividend payout by TVS.

BUY TVS Motor Share Price:

TVS Motor has continued to be among the top picks of Axis Securities for the past few months, and April 2024 is no different.

Once again, Axis has recommended buying TVS Motor share price for a target price of Rs 2,375.

In its rationale, Axis Securities note said, "We believe TVSL to be ahead in introducing a range of EV products ahead of other 2W OEMs. Being well-placed among listed players, we expect the company's Revenue/EBITDA/PAT
to grow by ~17%/21%/24% CAGR over FY24E-26E."

Further, the brokerage added "We like TVSL because of its engineering and R&D capabilities, strong domestic retail network and increasing sales volumes from premium offerings in developed countries (Norton business to be developed in a few years). Based on the above strong fundamental outlook, we expect the company to deliver a strong ROE ranging between 27%-30% over the next few years."

With the competitive intensity increasing over the next few quarters in the EV and mid-weight motorcycle category, Axis Securities note said,"we value it at a sustainable premium P/E multiple of 31x on FY26 core EPS (earlier 32x on Dec'25 EPS) and other investments at 1x P/BV and TVSL Credit Services at 2x P/BV on FY23, thereby arriving at a TP of Rs 2,375 (unchanged)."

TVS Motor Company Ltd. (TVSL) is the 3rd largest 2-wheeler company in India with an annual sale of more than 30 Lc units and annual 2-wheeler (2W) and 3-wheeler (3W) capacity of over ~50 Lc and ~1.2 Lc respectively. It manufactures the largest range of 2Ws including mopeds, scooters, commuter motorcycles, and premium bikes. TVS is also India's 2nd largest exporter with exports to over 60 Countries. The company has four manufacturing plants, three located in India (Hosur in Tamil Nadu, Mysore in Karnataka, and Nalagarh in Himachal Pradesh) and one in Indonesia at Karawang.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.