TVS Motor share price up 33% in last six months; is it still buy-worthy? Experts weigh in

The stock has been on a bullish run in the last six months, gaining over 33 per cent against a 22 per cent gain in the BSE Auto index and a 10 per cent gain in the equity benchmark Sensex.

Experts are positive about the stock for the long term as they underscore the company’s aggressive push toward electric vehicle (EV) mobility.

Read more: ‘TVS Motor is investing in a future for EVs over 5-10 yrs’

TVS reported a 4 per cent year-on-year (YoY) growth in August sales. In a statement, it said it sold 3,45,848 units in August 2023 against 3,33,787 units sold in August 2022.

It said TVS iQube Electric recorded the highest sales of 23,887 units in August 2023 against the sales of 4,418 units in the same month last year. The company claimed that the order book for the TVS iQube Electric scooter continues to be healthy.

As Mint reported earlier, TVS Motor is all set to dispatch a record volume of more than two lakh scooters, based on its EV platform, in the current financial year. This launch is strategically aimed at capturing the attention of a new segment of buyers.

Starting from August 2023, the company plans on accelerating the production of the existing EV scooter, iQube, by an additional 25,000 units per month. The introduction of novel Electric scooter models will also contribute to the overall EV production growth.

The company is targeting to produce 100,000 EVs in FY24, up from 50,000 units in FY23.

Read more: TVS Motor’s bold EV play: What investors need to know

TCS has an ambitious goal of becoming a global mobility player of importance, with half its revenues accruing overseas.

“By 2025, we see 30 per cent of the scooter industry becoming electric and more than half of our revenues coming from outside India,” TVS Motor MD Sudarshan Venu said in a recent interview with The Economic Times.

Read more: Why more Indian manufacturers should emulate TVS Motor’s global ambitions

As the company is moving aggressively with its growth plan, we talked to experts to understand what the fundamentals and technical indicators suggest about the stock. Here’s what they said:

Fundamental views

Sneha Poddar, AVP Research, Broking & Distribution at Motilal Oswal Financial Services observed that the recovery in the domestic two-wheeler market, new product launches, and a recovery in exports should drive the volume growth for TVS.

It recently launched a few new products including an electric scooter and a sports bike and has been laying out strategies to become big in the electric vehicle (EV) market.

“Its market share improved to 25 per cent in the EV two-wheeler market, positioning it as the second largest player. Further, it is enjoying the benefits of economies of scale and operating leverage, which should help it sustain its EBITDA margin at a double-digit level,” said Poddar.

Poddar is positive about the stock for the long-term but considering the sharp rise in valuations, she said short-term investors may consider booking some profit.

“Investors can continue holding the stock from a long-term perspective as the two-wheeler market recovery has started. However, valuations largely reflect its strong earnings. So, short-term investors can partially book profit,” said Poddar.

Technical views on TVS Motor stock

Technical analysts point out that the stock may rise further but because of the sharp gains in the stock, some profit booking cannot be ruled out.

Vaishali Parekh, Vice President – Technical Research at Prabhudas Lilladher underscored that the stock has been moving within a range for quite some time and recently indicated a breakout above the ₹1,400 level, improving the bias.

“The next near-term target is at ₹1,690 with the significant 50EMA (exponential moving average) level of ₹1,360 as the support. With the RSI well placed and indicating strength, we anticipate a further rise in the coming days,” said Parekh.

Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers pointed out that this counter has been making higher highs and higher lows for the last eight months or so. At the current juncture, it is trading above all major exponential moving averages.

“It looks over-extended and can witness some profit booking. As we advance, support is seen near ₹1,400 and resistance is seen near ₹1,500,” said Patel.

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Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

Updated: 08 Sep 2023, 02:07 PM IST