TVS Srichakra extends gains after unveiling capex plan

TVS Srichakra jumped 7.72% to Rs 1836.20, extending gains for second day.

The stock has added 13.70% in two sessions from its recent closing low of Rs 1,615 on Monday (7 December 2020).

TVS Srichakra on Tuesday (8 December) announced its planned capital expenditure of Rs 1,000 crore to ramp up manufacturing in its Madurai and Pantnagar plants. The company said that the investment is planned over a three-year period. The investment, when fully made, will result in an increase in 2-wheeler & 3-wheeler tyre capacity by 25-30% and doubling of off-highway tyre capacity from current levels. The investment is planned to be funded by a mix of debt and internal accruals.

The expansion program being undertaken will focus on setting up additional capacities in this space to cater to growing demand across its customer base - both domestically and globally. Included in this investment, is a plan to enhance capacities in the company's pioneering range of radial tyres and other premium products. The investment outlay will also significantly increase TVS Srichakra's capacities and technological capabilities in the off-highway tyre segment, with a clear focus on global markets.

TVS Srichakra is India's leading 2 & 3-wheeler tyre manufacturer. The company supplies tyres to most two and three wheeler manufacturers that operate in India, besides holding a significant presence in the domestic after market. The company is also a leading exporter of 2 & 3 wheeler tyres.

The company's consolidated net profit surged 103.4% to Rs 39.85 crore on a 0.9% decline in net sales to Rs 552.38 crore in Q2 FY21 over Q2 FY20.

In the past one month, the stock has added 27.37% while the benchmark Sensex has risen 7.80% during the same period.

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