This Tata Motors-promoted stock zoomed 20% today on strong Q1 results

Automobile Corporation of Goa share price were locked in the upper circuit of 20% at Rs 2,861, hitting a new high on Wednesday

Shares of Automobile Corporation of Goa (ACGL) were locked in the 20-per cent upper circuit at Rs 2,861 on the BSE today. ACGL share price hit a new high on Wednesday after the company reported 77 per cent year-on-year (Y-o-Y) jump in net profit at Rs 17.92 crore in June quarter (Q1FY25) on the back of a strong operational performance.

The auto ancillary company had posted a profit of Rs 10.1 crore in Q1FY24. Automobile Corporation of Goa stock surpassed its previous high of Rs 2,540 touched on June 20, 2024.

Total income from operations grew 34.7 per cent to Rs 203.32 crore as against Rs 150.98 crore in Q1FY24. Earnings before interest, taxes, depreciation, and amortisation (Ebitda) rose 72 per cent Y-o-Y at Rs 25.29 crore; margin expanded 287bps to 12.44 per cent from 9.57 per cent in Q1FY24.

 

ACGL is promoted by Tata Motors (TML), and Tata Motor Finance Limited (TMFL; a subsidiary of TML). Tata Motors holds around 48.98 per cent direct stake and 0.79 per cent stake through TMFL. The company is into the manufacturing and assembling of bus bodies and manufactures sheet metal components for commercial vehicles (oil pans, gear covers, emergency doors, door panels, etc). ACGL derives 90 per cent-95 per cent of its total revenue from TML alone.

With the economic revival, post the Covid-19 pandemic, the company has shown staggering growth in terms of revenue and profits due to operational leverages. With the Government initiative, growing demands, tapping the opportunities in the electric vehicle (EV) segment in achieving the zero emission goal, the industry has a positive growth outlook.

Besides, with the government's increased focus on development of infrastructure including highways and electric mobility, there would be an opportunity for growth in commercial vehicles and mass transportation solutions, ACGL said in FY24 annual report.

The company said it is working on product up-gradation to meet market requirements by diversifying its product range in school, staff, and EV segment with new contemporary designs.

The Government of India encourages foreign investment in the automobile sector and has allowed 100 per cent FDI under the automatic route. In January 2024, the Ministry of Heavy Industries extended the tenure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year. The incentive will now be applicable for a total of five consecutive financial years, until March 2028.

Ministry of Heavy Industries (MHI) officials revealed that India plans to launch a new scheme to incentivise electric vehicle purchases and improve charging infrastructure, aligning with the interim budget's focus on eco-friendly transportation.

Meanwhile, ACGL continues to enjoy strong operational linkages with TML, being one of its leading suppliers for bus body and chassis, contributing around 40 per cent of TML's bus segment requirements. Furthermore, being part of the Tata group, the group continues to extend managerial support with strong board representation in ACGL and benefits from the expertise, management team, and ingenuity of the larger organization, according to CARE Ratings.