Buy This Motor Stock For 14% Upside, In Near-term: Axis Securities

Reputed brokerage firm Axis Securities recommends buying the stocks of TVS Motor Company Ltd. for a 14% return. The company is doing well in the overseas markets with its share in India's 2W exports rising to 24% in 9MFY22. TVSL is turning more aggressive on EVs and plans to launch new electric 2Ws/3Ws over the next 2 years.

Target Price

The Current Market Price (CMP) of TVS Motor Company Ltd. is Rs. 633. Axis Securities has estimated a Target Price for the stock at Rs. 720. The stock is expected to offer a 14% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 633
Target Price	Rs. 720
1 year return	14.00%

Company performance

The company's Net Sales in FY 21 stood at Rs. 16,751 crore, which is expected to grow at Rs. 20,962 crore in FY 22. TVSL's Net Profit in FY 21 stood at Rs. 612 crore, while it is expected to grow at Rs. 908 crore in FY 22. Their EBITDA in FY 21 was Rs. 1,463 crore, which is anticipated to be at Rs. 1980 crore in FY 22. EBITDA margin is up from ~7% over FY10-19 to 10% in Q3FY22 and Axis is expecting further improvement to ~11% in FY24E. Its market share in scooters has improved to 21% (9MFY22) from 15% in FY17, and in the premium (125cc+) motorcycles segment, it has risen to 19% from 11% over the same period.

 

Comments by Axis Securities

Axis Securities said, "We expect the company's volumes to grow by ~9.5% CAGR over FY21-24E. We expect robust revenue/earnings CAGRs of 16%/36% over FY21-24E. Considering the new product launches and improving demand outlook for the company in domestic as well as international markets, we expect TVSL to grow ahead of the industry over the next 2 years. We expect the company's EBITDA margins to remain sustainable at current levels over the coming quarters on account of improving product mix, higher exports, and cost optimization measures."

About the company

TVS Motor Company Ltd. is the 3rd largest two-wheeler company in India with an annual sale of more than 30 Lc units and annual 2-wheelers (2W) and 3-wheelers (3W) capacity of over 55 Lc and 2 Lc respectively. It manufactures the largest range of 2W including mopeds, scooters, commuter motorcycles, and racing-inspired bikes (comprising the Apache series and the RR310). TVS is also India's 2nd largest exporter with exports to over 60 Countries and stands as the largest company of the TVS Group in terms of size and turnover.

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Disclaimer

The above stock was picked from the brokerage report of Axis Securities. 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.