TVS Motor Company on Wednesday overtook Hero MotoCorp in terms of market value to become the sixth largest automotive company by market capitalization. The m-cap of the former is now Rs 51,681 crore to Rs 50,951 crore of the latter. Bajaj Auto, at Rs 104,872 crore, is the only two-wheeler manufacturer in the top five.
TVS shares rose 73 percent this year, while Bajaj and Hero shares rose by only 3 and 10 percent respectively. While TVS’s sales, net profit, and market share are lower than those of Bajaj and Hero, the company has a number of triggers.
TVS saw the highest earnings growth among car makers in the past few months. The increases are in line with expectations that its margins will increase the most among its competitors given the decline in raw material prices. What would further improve profitability would be a richer product range and profits from premiumization.
The company was able to increase its margins even in fiscal year 2021-22 (fiscal year 22), despite a 24 percent increase in input costs. The higher share of exports, as well as careful cost management and price increases, have helped the company achieve better results on the margin front.
New launches in the motorcycle and scooter segments have helped the company increase its market share in the FY22 and the same is expected to continue in the FY23 as it enters new product segments. The Ronin’s 225cc motorcycle entry marked its entry into the cruiser motorcycle segment.
Finally, the focus on electric vehicles, with plans to increase production and create a separate subsidiary, is expected to increase funding and is viewed positively by brokerage houses.