TVS Motor Stock Falls As Company Denies Fundraising Report
A clarification by TVS Motor Co. dampened the intra-day surge in its share price, the most in more than six months. The price jump was prompted by a news report that the two-wheeler maker is looking to raise funds from global private equity investors for its electric vehicle unit.
The company is in talks with a consortium of TPG Rise Climate and Abu Dhabi’s ADQ to raise nearly $500 million (Rs 3,693 crore), the Economic Times reported citing people aware of the matter.
TVS Motor did not respond to BloombergQuint’s emailed queries. But, later in the day it informed the stock exchanges that no such funding negotiation is underway and that the EV subsidiary has not yet been incorporated.
At the board meeting held on Oct. 2, 2021, approval was granted for incorporation of a wholly owned subsidiary to undertake its electric mobility business and the same was duly intimated to the stock exchanges. We have not yet incorporated the subsidiary.TVS Motor Company Statement
Last month, TVS Motor’s board had approved incorporation of a wholly owned subsidiary to undertake its electric mobility business.
“The subsidiary will give us freedom, better focus and flexibility to create scale in the EV business globally,” the company said in a post-earnings call last month, adding that it is working on to increase its capacity to 10,000 units per month from January.
In July, the company committed Rs 1,000 crore to manufacture electric vehicles.
This comes weeks after Tata Motors Ltd. said it was raising $1 billion (about Rs 7,500 crore ) for its EV-subsidiary from marquee investors. Earlier, Bajaj Auto Ltd., which has launched its iconic Chetak as an electric scooter, had announced a plan to set up a dedicated EV subsidiary to manufacture and sell two, three- and four-wheelers.
Shares of TVS Motor jumped more than 14%, the most since April 28, 2021, to Rs 813.95 apiece as of 11:03 a.m. on Tuesday. By close of trade the stock pared gains to 3% at Rs 730.
Of the 46 analysts tracking the company, 27 maintained a 'buy', seven suggest a 'hold' and 12 recommend a 'sell', according to Bloomberg data. The 12-month consensus price target implies a downside of 15.9%.
The relative strength index on the stock was 89, suggesting it may be 'overbought'. Its trading volume was 10 times the 30-day average volume for this time of the day.