Greaves Cotton soars 20%, hits all-time high on the back of heavy volumes

Up 52% so far in Jan; demand has surged after EV arm reported strong sales

Shares of Greaves Cotton hit an all-time high of Rs 209.45 apiece, before closing higher by 19.91 per cent at Rs 209.30 on the BSE on the back of heavy volumes. The stock surpassed its previous high of Rs 184.25 registered on June 24.
 
In the six trading days in January, the stock has zoomed 51.7 per cent after the company’s arm Greaves Electric Mobility, a leading electric two and three-wheeler manufacturer, sold over 10,000 units in December.
 
Ampere, the fastest growing e-mobility brand, reported a record growth of almost 6 times in revenue in December versus the same month last year and E3W business grew by 101 per cent in volume terms, the company said in a statement.
 
It said the December quarter (Q3) was significant from many perspectives for Greaves Electric Mobility, with the company acquiring 100 per cent stake in electric 3-wheeler company ELE (e-rickshaws) and completing acquisition of 26 per cent stake in another electric 3-wheeler company MLR Auto (Teja brand), along with the launch of a mega EV factory in Ranipet in Tamil Nadu, one of the biggest such factories in the country.
 
Inaugurated on November 23, the Ranipet plant is part of the Rs 700 crore investment road map announced by the company to expand its growing share in the Indian EV market. It will have a capacity of 120,000 units by the end of financial year 2021-22 (FY22). Greaves Mobility currently enjoys the fastest growing market share in a keenly contested electric mobility segment, the company said.

 
With e-mobility forming 24 per cent of Greaves Cotton’s overall revenue in Q2FY22, the diversification has de-risked the portfolio significantly amid a slump in the traditional business. However, the long-term driver continues to be various growth segments across fuel types that the company focuses on, analysts at Edelweiss Securities had said in the Q2 results update.
 
With a robust portfolio of products, focus on scalability across distribution and supply-chain remains key in the near to medium term. While October remains strong for the e-mobility portfolio, turning profitable is key to a rerating. We will watch out for competition from large players within e-mobility, the brokerage firm had said.
 
Meanwhile, rating agency India Ratings and Research (Ind-Ra) believes that electrification could substantially pick up in the 2W and 3W segments in three-to-four years, led by the following factors: the reduced upfront pricing differential between an internal combustion engine 2W and e-2W post the increase in the subsidy for e-2W under Faster Adoption and Manufacturing of Electric Vehicles II by 50 per cent to Rs 15,000/kWh in June 2021, no significant requirement of battery charging infrastructure, low operational cost, amid increasing cost of ownership for internal combustion engine vehicles, due to increase in fuel costs and prices undertaken by OEMs on account of increasing material costs.