The automobile sector is a fast-paced, ever-changing industry. Any economic cycle will have a direct impact on the sector, and companies will strive to maximize earnings and remain competitive in both good and bad times.
The auto industry has changed significantly over the last decade with automobile prices leveling out as the sector transforms into a new era of less variety, higher pricing, and better profit margins.
The S&P BSE Auto Index was at 31,970.1 (up 0.7%) on Friday’s trading session. over the last 1 year, it has gained 37.94%. Within the automobile sector, TVS Motors and Bajaj Auto have outperformed the index by giving a return of 25 percent and above over the index return of 9.70 percent in the last four months.
Here is a quick walkthrough of companies.
TVS Motor Company Ltd
The shares of TVS Ltd currently trading at the price of ₹ 1,234.10 on May 12th after hitting a 52-week high of ₹ 1,249.50 or 104.76 percent, On a last four-month basis, the stock gained 27.3 percent ranging from ₹ 969.90 to the current price level.
TVS Motor manufactures the largest range of 2-wheelers. It is engaged in the manufacturing of motorcycles, scooters, mopeds, three-wheelers, parts, and accessories. TVS Motor is also the largest exporter in India with exports to several Countries. Company strength lies in its extensive research and development, resulting in products that are industry-leading in terms of innovation. Their product range includes Scooters, Motorcycles, Mopeds, Electric Vehicles, and Three Wheelers.
As per Consolidated financials Company reported their revenue which significantly increased from ₹ 24,355 crores during FY 21-22 to ₹ 31,973 crores in FY 22-23. Similarly. their net profits increased from ₹ 728 Crore compared to ₹ 1,350 Crore in the same timeframe period. The company has a debt-to-equity ratio of 3.93 as of FY23.
The basic profitability ratios exhibiting operational efficiencies such as return on equity (ROE) and return on capital employed (ROCE) showed an upward trend mentioned in the financial year. ROE moved from 17.2 percent during FY 21-22 to 24.13 percent in FY 22-23 and ROCE, keeping the time frame the same, took a shift from 15.46 percent to 20.89 percent and The debt-to-equity ratio stands at 3.93 as of FY23.
Bajaj Auto Ltd
The shares of Bajaj Auto Ltd currently trading at the price of ₹ 4,583.70 on May 12th after hitting a 52-week high of ₹4,628.85 or 27.50 percent, On a last four-month basis, the stock gained 28.22 percent ranging from ₹3,572.75 to the current price level.
Bajaj Auto Ltd is an Indian company that is ranked as the world’s third-largest motorcycle manufacturer and its largest three-wheeler & quadricycle manufacturer. The company exports to 79 countries and a significant share of revenues come from Exports. And has acquired 48% of the KTM Brand which manufactures sports and super sports two-wheelers.
As per Consolidated financials Company reported their revenue which increased from ₹ 33,144 crores during FY 21-22 to ₹ 36,455 crores in FY 22-23. In contrast, their net profits slightly decreased from ₹ 5,586 Crore compared to ₹5,530 Crore in the same timeframe period.
The basic profitability ratios exhibit operational efficiencies such as return on equity (ROE) and return on capital employed (ROCE). ROE of 20.64 has remained constant percent during FY 21-22 to FY 22-23 and ROCE, keeping the time frame the same, took a shift from 20.59 percent to 24.61 percent and it is a debt-free company.
Written by Omkar S
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