Promoter entity offloaded its entire stake in this blue chip company;Do you own its stock?

The promoter entity of TVS Motor Company on Monday offloaded 25.69 lakh shares of the firm for ₹ 262 crores via open market transactions. As a result, its shares lost 3% by Monday’s closing bell. They were trading at ₹ 1015.00 apiece at 12:52 PM on Tuesday. 

According to the bulk deal data available on the Bombay Stock Exchange (BSE), Srinivasan Trust sold 25,69,726 shares, or 0.54% stake in the company. This is the entire stake that the entity held. The shares were sold at an average price of ₹ 1020.03. 

TVS Motor’s shares outperformed the thirty-share index as its share price gained 61.27% as per year-to-date (YTD) data. On the other hand, the BSE Sensex gained 5.57% YTD. However, its share price dropped by 8.80% in the past month, as compared to a 2.11% increase in the Sensex. 

Generally, when a promoter sells a stake, it is not taken as a positive development. However, in a recent earnings call, KN Radhakrishnan, director & CEO, of TVS Motor Company said that the company will grow ahead of the industry, both in domestic and international markets, on the back of investments made especially in the area of marketing coupled with the launch of new products. 

The motor company posted a 2 per cent year-on-year (YoY) growth in its total sales at 277,123 units, against 272,693 units in the same month last year. It registered 23.5 per cent month-on-month de-growth in two-wheelers sales at 263,642 units thereby reporting the lowest volume for this fiscal year (FY23). 

TVS Motor Company primarily manufactures a wide range of two-wheelers, three-wheelers and their accessories. It is a large-cap company with a market capitalization of 48,354 crores. It has an ideal return on equity of 18.40% however, it has a high debt-to-equity ratio of 3.60. Its shares are trading at a price-to-equity ratio (P/E) of 45.07, which is significantly higher than the industry P/E of 13.71, indicating that it might be overvalued as compared to its peers. 

Written by Simran Bafna 

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