TVS Motor's market cap nears Rs 1 trillion; stock surges 55% in 5 months

TVS Motor has entered into a Memorandum of Understanding (MoU) with Guidance, the Nodal Agency of the Government of Tamil Nadu to invest Rs 5,000 crore in 5 years

Shares of TVS Motor Company hit a new high of Rs 2,061.15 as they rallied 4 per cent on the BSE in Monday's intraday trade, in an otherwise weak market, after the company proposed to invest Rs 5,000 crore in five years in Tamil Nadu.

In an exchange filing, TVS Motor said the company has entered into a Memorandum of Understanding (MoU) with Guidance, the Nodal Agency of Government of Tamil Nadu (GoTN).

GoTN will provide facilitation and support to TVS Motors in the form of necessary infrastructural support and regulatory facilitation subject to applicable laws, the company said.

On the bourses, the stock price of TVS Motor has zoomed 55 per cent in the past five months on strong demand. A sharp rally in the company's share price has seen TVS Motor's market capitalisation inche towards Rs 1 trillion-mark. It touched Rs 97,922 crore in the intraday trade today, BSE data shows.

During the third quarter (October to December) of the current financial year (Q3FY24), two-wheelers posted a robust growth of 27 per cent with sales of 1.06 million units as against sale of 0.84 million units in the third quarter of FY 22-23.

"In the medium to long term, rural demand, specifically for the entry-level segment, is slowly expected to pick up on account of increased infrastructure spending by the government and higher retail finance penetration along with expected stability in vehicle prices. Exports have bottomed out and are expected to recover MoM; stocks are at the right level as dispatches were earlier reduced to match retail levels. TVS Motor expects high demand from the LATAM region followed by African and Asian markets," according to analysts at Axis Securities.

Brokerage firm Motilal Oswal Financial Services, meanwhile, said they are already witnessing a reversal in demand patterns, especially in the 2Ws, wherein there is a high growth potential. As compared to other categories, 2Ws have a relatively better scope for growth over FY23-26E, the brokerage firm said.

With supply challenges now over, HDFC Securities expects TVS Motor's outperformance to continue on the back of healthy demand for its products like Raider, i-Qube, Jupiter125, etc.

"In exports, having established its presence in Africa, its outperformance is likely to be driven by its focus on penetrating Latin America in the coming years. Even in 2W EVs, TVS is putting the right building blocks in place in order to emerge as a leading player. Its investments in e-bikes in Europe, Norton and the extension of tie-up with BMW Motorrad are expected to deliver strong returns over a 2-3 year horizon," the brokerage firm said in Q2 result update.