TVS Motors had a sales growth of 93% in the last quarter. November growth is 36%,Two-wheeler sales jumped 36 percent to 2.1 lakh units while scooter sales increased by 62 percent to 62,223 units and motorcycle sales rose by 41 percent to 86,424 units during the same period. “Three wheeler sales of the company registered an increase of 44 percent, growing from 6,304 units in November 2013 to 9,067 units in November 2014, said the company in its filing.
This stock was an investment opportunity in July this year. It came to buy when the stock was at 150 levels. As of this writing the stocks has made 50% return on investment and it looks like continuing the growth path.
Another notable point here in TVS Motors is the Three wheeler sales, there has been talks going on in the markets that Autos will lose their market share against the competition from taxis, Autos are charging Rs. 12 per km now. Taxis that are operating at Rs. 14 per km has began to get as low as Rs. 10 per km. There is a high possibility that people will pick a taxi instead of an Auto, which has many drawbacks. With bumper to bumper traffic across all the major cities in our country, people will be forced to use more taxis for their commuting requirements, this means more business for Auto manufacturers.
This would mean lower sales for Three wheelers, but, TVS has managed to corner some of their competitors market share to increase their sales volumes. This show a great business strategy in place for the company.When a company has a good sales and earnings growth, it is eventually going add value to the stock. And has all the likeliness to run up and give good returns to its investors.
How long this growth is going to continue? That we may not know, but, as long as the growth is strong, if we are invested, we can reap rich rewards. A car that is going at a 60 km speed in 4th gear cannot come to an abrupt stop, it has to at least get down to the speed at 2nd gear and gradually slowdown. And this slowdown is going to be visible, which can be utilized as an opportunity to take exit and book profit.
One other stock that has been consistently having high growth is Eicher Motors, in the November month Eicher Motors, the Royal Enfield maker, sold 27,542 motorcycles in November, registering a growth of 52 percent compared to 18,131 units in November 2013. This stock came into high growth when the stock price was Rs. 1180, way back in 2010. From then on, it was a no look back for the stock.
In January 2014, the stock was quoting at Rs.5000 and today it is inching closer to Rs. 15000. A gain of 200% in 11 months, and the performance is going to continue. People normally shy away from stocks that are priced so high, complementing them with a low priced stock, but, price reflects the value the stock has in it. No smart investor will buy a stock at this price if there is no value.
Automobile stocks began to show strength in their earnings early this year and have rewarded their investors richly so far. But investing in any Auto stocks will not give us such high returns, specific stocks like Eicher, TVS have great potential in them. We need to identify such growth stocks for investment, which brings down the risk of stock investing almost to zero.
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