Investment Analysis: Which Two-Wheeler Stock for Long-Term Investment - TVS Motors vs. Bajaj Auto vs. Hero MotoCorp
In the Indian two-wheeler sector, companies like TVS Motors, Bajaj Auto, and Hero MotoCorp dominate the market. Determining which stock is a better long-term investment can be challenging, but a thorough analysis of their financials, growth potential, and current market standing can provide valuable insights.
TVS Motors Company Overview
TVS Motor Company is the third-largest two-wheeler manufacturer in India, with a revenue of over Rs 18,217 crore ($2.9 billion) and an annual sale of more than 3 million units. It boasts a production capacity of over 4.95 million vehicles annually and is the second-largest exporter in India, exporting to over 60 countries. As a member of the TVS Group, TVS Motor is the largest company in terms of size and turnover.
TVS Motor Company produces a wide range of two-wheelers, three-wheelers, parts, and accessories. The company's strong presence in the international market and its product diversity make it a compelling choice for investors.
Current Market Price and Fundamentals
The current market price of TVS Motors stock indicates its performance and attractiveness. A stock passes majority of the CANSLIM (Current Actions, News, and Stock Listings Issues, Myth and Investment Momentum) Investment criteria. The company showcases high TTM (Trailing Ty Months) EPS (Eventing Per Actions) growth and an increasing net profit margin quarter over quarter (QoQ). Moreover, TVS Motor generates strong cash from core business, with improving cash flow from operations over the past two years. The book value per share has also seen improvements.
However, there are some weaknesses noted, including a declining return on capital employed (RoCE), return on equity (ROE), and return on assets (ROA), which have all deceased over the last two years. Additionally, the company has high debt levels and has been unable to generate net cash flow annually.
Market Shareholding Pattern
The market shareholding pattern of TVS Motors is stable, with promoters maintaining a holding of 52.26%. Mutual funds increased their holdings from 15.70% to 15.75% in the December 2021 quarter. There has been an increase in the number of Mutual Fund schemes to 16 during the same period. Foreign Institutional Investors (FII/FPI) also increased their holdings from 12.77% to 12.86%, and the number of FII/FPI investors grew from 162 to 216. Institutional investors increased their holdings from 37.93% to 38.32%.
Financial Analysis
Over the past three years, TVS Motors has shown a 5.8% Compound Annual Growth Rate (CAGR) in revenue, a -3.1% CAGR in net profit, and a 14.3% CAGR in operating profit. These figures suggest both strengths and areas of concern. While the company is generating significant cash from its core operations and improving book value, its profitability indicators have shown a downward trend.
Brokers' Reports and Recommendations
Brokerage reports often provide insights into the performance and potential of each company. However, it is always important to consult with a financial advisor before making any investment decisions. If you found this content helpful, please upvote this answer and follow my space for more related content.
Note: The analysis provided is based on the available financial data and market performance of TVS Motors. It is crucial to conduct thorough research and seek professional advice before making investment decisions.