While peers like Hero Motocorp and Eicher Motors faced a downward trend in trading, TVS Motor Company's share price reached an all-time high on June 12. This new record follows an increase in target price by several brokerages for the two-wheeler manufacturer's stock after a stake sale in TVS Credit. Analysts anticipate a potential upside of up to 12 percent from the closing price on June 9.

As of 10:12 am, TVS Motor Company shares were trading slightly higher at Rs 1344.10 on the BSE. Investors in this stock have already gained more than a 25 percent return in 2023 (year-to-date), in contrast to the benchmark index Sensex, which has only risen about 2.5 percent during the same period.

The surge in the stock's value coincides with TVS Credit Services, the captive financing arm of TVS Motor Company, receiving an equity infusion of Rs 480 crore from Premji Invest, a private equity and venture capital investments firm. Under the transaction, Premji Invest will acquire a 9.7 percent equity stake in TVS Credit for Rs 737 crore through a combination of primary and secondary investment.

The primary capital will be utilised to bolster TVS Credit's efforts in expanding its customer base in new markets, enhancing the channel partner network, and advancing its digital transformation journey.

The deal brings two positive outcomes—it unlocks valuation potential and curtails the need for additional capital spending to fund growth, as TVS has already invested Rs 500 crore in the business during the financial year 2022-23.

Separately, TVS Motor Company’s subsidiary, TVS Motor (Singapore) Pte Ltd, has agreed to acquire an additional 25 percent stake in Swiss E-Mobility Group (SEMG), Switzerland by way of purchase of shares from the existing shareholders. SEMG is a subsidiary of TVS Motor (Singapore) Pte Ltd.

With this acquisition, SEMG will become a wholly owned subsidiary of TVS Motor Company, which had acquired a 75 percent stake in SEMG in January 2022. TVS Motor will pay Rs 180 crore for the remaining 25 percent stake.

SEMG sells branded e-bikes from manufacturers to end customers in the B2B and B2C segment and has 30 retail stores across Switzerland and Germany. It has close to $100 million in revenue.

After the TVS Credit stake sale, BoFA Securities has raised its target price on the two-wheeler maker’s stock to Rs 1,500 with a buy rating while Macquarie has an outperform stance with a target price of Rs 1,418.

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First Published:Jun 12, 2023 11:31 AM IST