800% Dividend Payout, Bonus Isssue Coming Up: Auto Stock TVS Motor Recommended To Buy Ahead Of Rewards

Two-wheeler giant, TVS Motor Company is in focus as it will turn ex-dividend next week. But that's not all, the auto player is planning a bonus issue announcement as well. Ahead of these rewards, TVS Motor is also among the top picks. Axis Securities has set a target price of Rs 2,350 apiece on TVS, which signals a nearly 14% upside ahead.

TVS is currently the third largest 2-wheeler company in India with an annual sale of more than 30 Lc units and annual 2- 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.

In its March top picks note, Axis Securities 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."

The brokerage likes 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).

Further, the brokerage's note added, "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 32x on FY26 core EPS (earlier 34x 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 2,350 (unchanged)."

On BSE, TVS Motor's share price stood at Rs 2,067.10 apiece with a market cap of Rs 48,120.58 crore on March 15. In a year, the stock has zoomed by over 97%.

TVS Motor Upcoming Dividend:

The company has recently declared an interim dividend of Rs. 8/- per share (800%) on 47,50,87,114 equity shares of Re.1/- each fully paid up, absorbing a sum of Rs. 380 Cr, for the financial year ending 31st March 2024.

Further, the e interim dividend declared will be paid to those shareholders, who hold shares in physical form and/or in electronic form and whose names appear in the Register of Members and/or Depositories respectively, as at the close of working hours on 19th March 2024, being the Record Date fixed by the Company for this purpose.

The dividend payout will be done within 30 days from the declaration of the interim dividend, as provided in the Companies Act, 2013.

TVS Motor Bonus Issue:

In its latest regulatory filing, TVS Motor said that "a meeting of the Board of Directors of the Company is being convened on Wednesday, 20th March 2024, inter-alia, to consider the issuance of Cumulative Non-Convertible Redeemable Preference Shares by way of Bonus, to the shareholders of the Company."

This will be the second bonus share announced by TVS, and also the first bonus in 14 years. The first bonus issuance was of a 1:1 ratio, carried after the record date of September 9, 2010. Apart from this, TVS Motor has turned ex-split for the ratio of 1:1o in December 2003.

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.