Stock of this auto ancillary company has zoomed 142% in last five months

Shares of Talbros Automotive Components (TACL) were locked in the 20 per cent upper circuit on BSE and touched a fresh high of Rs 251.10 on Friday at 10:54 AM.

The stock of the auto ancillary company has turned ex-date for a stock split in ratio of 1:5 i.e. 1 stock of face value of Rs 10 each into 5 shares of face value of Rs 2 per equity share.

The stock surpassed its previous high of Rs 232.59 (adjusted to stock split) touched on August 11. A combined around 1 million equity shares changed hands and there were pending buy orders for nearly 1 lakh shares on the NSE and BSE.

The rationale behind the stock split was to enhance trading activity and liquidity of the company's equity split shares, to encourage participation of small investors by making the shares more attractive to invest due to increased volume on account of larger free float and lowered price per share, the company said. 

A stock split/sub division of shares is a corporate action wherein a company issues additional shares to shareholders, increasing the total by the specified ratio based on the shares they held previously.

Companies often choose to split their stock to lower its trading price to a more comfortable range for most investors and to increase the liquidity of trading in its shares.

In the past five months, the stock price of TACL has more-than-doubled, zooming 142 per cent, during the period. Since April, it has skyrocketed 206 per cent from a level of Rs 82.

TACL is an auto component player with a diversified portfolio of gaskets, heat shields, forgings, suspension systems, anti-vibration products & hoses.

Talbros Group portfolio includes Mercedes Benz dealership for passenger cars. Few of its marquee customers include Bajaj Auto, Tata Cummins, Volvo Eicher India, Ashok Leyland, among many others.

The global trend toward electric vehicles is expanding, and Talbros is poised to harness the potential opportunities based on its strong product portfolio, including supplying parts for plug-in hybrid electric vehicles to OEMs globally.

The company has secured orders from top domestic OEMs for EVs, presenting a significant growth opportunity in this market. The company is diversifying its business by expanding into non-automotive segments, which offers new revenue streams and reduces reliance on a single sector.

Exports present a significant opportunity for the company to expand its customer base beyond the domestic market, tapping into the growing global demand for automotive components, TACL said.

The government's target of achieving 20 per cent ethanol blending in petrol by 2025 also presents an opportunity for the company.

Talbros has already received orders worth around Rs 150 crore from multiple passenger vehicle OEMs in India to facilitate the E20 fuel mechanism.

Meanwhile, despite inflationary pressure throughout the year, preponing purchases before the implementation of new fuel emission norms (BS-VI Phase -II), easing of semiconductor chip supply, and pent-up demand in the automobile industry led to sales growth for the automobile industry, according to CARE Ratings.

CARE Ratings expects TACL to have stable operational performance. Going forward, the rating agency expects the PBILDT margin to remain in the range of around 13 per cent-14 per cent. CARE Ratings also believes that TACL shall sustain its comfortable financial risk profile over the medium term.