Atul Auto zooms 19% on heavy volumes, hit highest level since May 2018

A combined 3.33 million shares, representing 12.8 per cent of total equity of Atul Auto, changed hands on the NSE and BSE till 12:05 PM

Shares of Atul Auto hit over five-year high of Rs 453.40 on the BSE in Wednesday's intraday trade, as they zoomed 19 per cent on the back of heavy volumes. The stock of  the commercial vehicles maker was trading at its highest level since May 2018. It surpassed its previous high of Rs 433.95, touched on April 20, 2023.

The average trading volumes on the counter jumped over eight-fold today with a combined 3.33 million shares, representing 12.8 per cent of total equity of Atul Auto, having changed hands on the NSE and BSE till 12:05 PM.

Thus far in the current calendar year of 2023, the stock has zoomed 61 per cent as compared to 6.8 per cent rise in the S&P BSE Sensex.

Atul Auto manufactures three wheelers (goods as well as passenger segments) under the Atul brand, and spares, components, and allied products. The company is an established player in the three-wheeler industry, commanding around 5 per cent of domestic market share and 3 per cent of overall market share.

It caters to demand for passenger, cargo, petrol, diesel, liquid petroleum gas, and electric vehicles. The distribution network is spread across India. However, the company operates only in the three-wheeler segment, exposing it to high segment concentration risk. Timely innovation, introduction of new products, in line with market needs, and revival of overall demand will be the driving factors for growth in sales.

For the June quarter (Q1-FY24), Atul Auto's consolidated loss widened to Rs 9.41 crore from Rs 3.65 crore in the year ago quarter, due to lower operational income. It had posted a net profit of Rs 3.34 crore in the March quarter. The company’s total revenue from operations declined 44 per cent year-on-year and 60 per cent quarter-on-quarter to Rs 59.65 crore.

Earlier this month, CRISIL Ratings revised its outlook on the long-term bank facilities of Atul Auto to 'Stable' from 'Negative', while reaffirming the rating at 'CRISIL BBB+'. The short-term rating has been reaffirmed at 'CRISIL A2'. The rating agency believes Atul Auto will continue to benefit from its established market presence, supported by a robust distribution network.

"The outlook revision factors in improved business performance of Atul Auto after Covid-19 led slowdown and further expected improvement in vehicle sales over the medium-term. However vehicle sale numbers remain low during the first quarter on account of delay in regulatory approval for its diesel engine vehicles and same has been resolved and expected healthy contribution from diesel vehicles is expected to improve overall vehicle sales numbers," CRISIL Ratings said in its rationale.

"CRISIL will continue to monitor momentum in vehicle sales number over the medium-term. Though financial risk profile continues to remain healthy and further improved on account of additional infusion of funds by promoters and the additional fund infusion also improved company’s liquidity profile. However rating continues to remain constrained because of business risk profile," the rating agency said.