Force Motors surges 10%, hits over 5-year high on stellar Q1 performance

Thus far in the current financial year 2023-24, the stock has zoomed 161 per cent, as compared to 11.6 per cent rise in the S&P BSE Sensex.

Shares of Force Motors hit an over five-year high, and were locked at the 10 per cent upper circuit at Rs 3,038.85 on the BSE on Thursday at 09:21 AM; after the company reported a stellar performance in June quarter (Q1FY23).

The company posted a consolidated net profit of Rs 68.59 crore, on strong operational performance. The automobile company had posted net loss of Rs 16.59 crore in a year ago quarter.

Revenue from operations rose 53 per cent to Rs 1,488 crore during the quarter, as compared to Rs 970.80 crore in the corresponding quarter of previous year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin improved to 12.14 per cent from 4.61 per cent in Q1FY23.

Sales of commercial vehicles increased amid a pick-up in construction projects, as the Indian government pushed for higher capital expenditure in its last full Budget ahead of a parliamentary elections in 2024.

Currently, the stock quotes at its highest level since May 2018. Thus far in the current financial year 2023-24, it has zoomed 161 per cent, as compared to 11.6 per cent rise in the S&P BSE Sensex.

Force Motors is the flagship company of the Abhay Firodia group. The company is a fully vertically integrated manufacturer of small and light commercial vehicles (CVs), multiutility vehicles, and agricultural tractors. Under the auto components division, engines are assembled for Mercedes-Benz India and BMW India.

he primary brands in LCVs and multiutility vehicles include Traveller, Trax, Gurkha and Shaktiman, while the brands in tractors are Balwan, Orchard, Abhiman and Sanman.

CRISIL Ratings believes Force Motors will continue to benefit from its leadership position in niche products segments, revenue diversity and stable operating profitability.

Furthermore, the financial risk profile will improve over the medium term, with limited increase in total debt in future because of healthy cash accrual vis a vis progressive loan repayments and financial flexibility of the Abhay Firodia group, the rating agency said in its rationale.