Force Motors hits lifetime high; soars nearly 70% since September 7

The stock soared nearly 70% to Rs 3,333 from its recent low of Rs 1,967 touched on September 7.

Force Motors has rallied 11% to Rs 3,333, also its lifetime high on the BSE on back of heavy volumes. The stock of cars & utility vehicles maker has soared nearly 70% from its recent low of Rs 1,967 touched on September 7.

The trading volumes on the counter more than doubled with 679,000 shares changed hands till 03:18 pm, against an average 304,000 shares that were traded daily in past two weeks on the BSE.

In past six trading sessions, the stock soared 36% from Rs 2,457 on October 5, after the exchange raised the circuit limit of the stock from 5% to 20%.

Brokerage IndiaNivesh is bullish on the long-term prospect of the company, initiates ‘Buy’ rating on the stock as it believes the picture will change dramatically for the automaker by FY20, with the company's auto component segment contributing 54% of revenues from 30% at present.

“With higher volumes, operating leverage would kick in further which could mean an earnings before interest, taxes, depreciation and amortization (EBITDA) margin of close to 10% and net profit margin (NPM) of around 7% in 2020. This would result in net profit of Rs 440 crore and earning per share (EPS) of around Rs 334,” the broking firm said in a report dated October 5, 2015.

With such consistent performance of sales compound annual growth rate (CAGR) of 22% and profit CAGR of 37% over FY15?FY20E, the multiple can easily expand to 30X giving a target price of around Rs 10,011 in 2020, added report.

At 03:18 pm, the stock was up 10% at Rs 3,321 compared to 0.21% fall in the Sensex.