TVS shares zoom to record high after DAM Capital sees 100% upside in auto stock

TVS Motor Company shares surged to a record high on Wednesday, continuing to rise for the fifth session in a row, after brokerage DAM Capital raised its price target for the auto stock by Rs 1,176 to Rs 3,051 apiece. The TVS Motor stock gained by as much as Rs 43.2, or 2.8 per cent, to an all-time high of Rs 1,571 apiece, surpassing a peak registered the previous day.  

The brokerage, whose target implies an upside of almost 100 per cent in the stock from the previous close, maintained its 'buy' rating on TVS Motor Company. DAM Capital highlighted the following growth triggers for TVS:  

• Strong growth in exports: The brokerage said it estimates volume growth of more than 30 per cent for the auto maker in the second half of the current financial year. It also pointed out that the contribution of exports to its revenue improved to 29 per cent in 2022-23 from 16 per cent in 2017-18. 
• Strong festive sales: DAM Capital expects the country's upcoming festive season to boost TVS Motor's domestic two-wheeler business amid a gradual improvement in market share on the back of premiumisation.
• Robust EV performance: The brokerage highlighted that the auto maker's market share in electric two-wheelers stands at 19 per cent owing to strong sales of its iQube model.

According to the brokerage, TVS Motor Company's EBITDA margin is expected to improve to 12.5 per cent in the financial year 2024-25 and 13 per cent the next year from 10.1 per cent in the year ended March 2023. The company's market share in African countries has improved by 150-200 basis points in the past three years, DAM Capital added.

Here's a summary of TVS Motor Company's export volumes over the past few months: 

TVS Motor Company—whose popular two-wheeler models include Apache, Jupiter, Zest, XL100 and iQube—will report its financial results for the second quarter of the current financial year on October 30.  

Meanwhile, Goldman Sachs maintained a 'neutral' call on TVS Motor Company and raised its price target for the stock by Rs 120 to Rs 1,460 apiece.

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