Stock of this auto company has zoomed over 80% in past 18 trading sessions

Force Motors hit a new high of Rs 6,100 in intra-day trade on Tuesday and has rallied 38% in four days after the has admitted the equity shares of the company to dealings on the exchange from Feb 14.

Shares of Force Motors hit a new high of Rs 6,100, as they soared nearly 7 per cent on the BSE in Tuesday’s intra-day trade. The stock of automobile company was trading higher for the fourth straight day and surged 38 per cent after the National Stock Exchange (NSE) admitted the equity shares of the company to dealings on NSE (Capital Market Segment) with effect from February 14, 2024.

Since January 25, in past 18 trading days, the market price of Force Motors, the Abhay Firodia group company, has zoomed 82 per cent from level of Rs 3,352 on the BSE.

Force Motors is a fully, vertically integrated automobile company, with expertise in design, development and manufacture of the full spectrum of automotive components, aggregates and vehicles. Its range of products includes Light Commercial Vehicles (LCV), Multi-Utility Vehicles (MUV), Small Commercial Vehicles (SCV), Special Vehicles (SV) and Agricultural Tractors.

Under the auto components division, engines are assembled for MBIPL and BMW. The primary brands in LCVs and MUV’s include Traveller, Urbania, T3 Buses, Trax, Citiline and Gurkha, while the brands in tractors are Balwan, Orchard, Abhiman and Sanman.

The opportunity in India for successfully enlarging the Tour and Travel hospitality sector is a very substantial possibility to achieve high economic gains. The improving roadway infrastructure in India, the focus on connecting attractive pilgrimage centers, and tourist sites to the large and efficient grid of express ways and highways, will yield impressive results in the future. This is a special opportunity, given the emerging enhanced stature of India, as the country to travel to, Force Motors had said in its FY23 annual report.

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 performance of Force Motors is expected to further improve with new product launches (face-lift versions of Urbania, Citiline and Gurkha) and improving traction in the exports market, while better utilization of capacity will enable operating margins of 12-13 per cent over the medium term, the rating agency said in rationale.

For the first nine months (April to December) of financial year 2023-24 (9MFY24), Force Motors had reported net profit of Rs 264.97 crore, as compared to Rs 2.89 crore in 9MFY23. In entire previous fiscal FY23, the company had reported net profit of Rs 152.05 crore. The company’s revenue in 9MFY24 jumped 41 per cent year-on-year at Rs 4,981 crore from Rs 3,538 crore.

Demand for LCV and MUVs catered to by Force Motors has bounced back strongly with opening up of school, corporate offices and pick up in travel. Operating margins in the first nine months of fiscal 2024 sharply improved to 13.1 per cent from 7.5 per cent in fiscal 2023 due price revisions and better product mix coupled with better operating leverage. The margins are expected to remain stable at 12-13 per cent over the medium term, according to analysts.