Shares of TVS Motor Co. dropped the most in four months, erasing all gains made after the two-wheeler maker extended partnership with BMW Motorrad for future technologies and electric vehicles.
The stock closed 5.70% lower at Rs 635.35 on Thursday, and was the worst performer in the Nifty Auto Index, according to Bloomberg data. The shares had jumped as much as 7% on Wednesday and ended 2% higher.
TVS Motors on Dec. 15 announced that it’s expanding the scope of its partnership with BMW Motorrad to new platforms and future technologies, including electric vehicles. Exclusive products for both companies will be developed on these common platforms, and they will retail products globally The first product under the partnership will be launched in 24 months.
TVS and BMW, according to a Morgan Stanley report, started their partnership in April 2013, and in the second quarter ended September, TVS sold around 6,400 BMW motorcycles—representing about 1.5% of its total motorcycle volumes.
The research house remains ‘underweight’ on TVS Motor due to rising EV competition, weak underlying demand in two-wheelers and premium valuations. The company trades at 24 times estimated FY24 earnings versus 12 times for Bajaj Auto Ltd., the report said. Morgan Stanley has set a price target of Rs 604 apiece, a downside of 10%, for TVS Motor.
Other Highlights From Morgan Stanley Report On TVS Motor:
Successful EV launches, a sharp recovery in exports and a sharp margin expansion are key upside risks.
Continued volume slowdown and any loss of market share are downside risks.
Expects a flurry of EV announcements, including from Hero (partnership with Gogoro) and Bajaj (partnerships with KTM/Triumph) over the next 12 months.
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