TVS Motors is not cheap by any valuation metric but the stock is continuously doing very well, from Rs 1,450 odd, it is knocking at Rs 1,700. Ahead of the Ola Electric IPO, people are noticing that even TVS Motor has a very large EV play, which is at least 65-70% of Ola Electric operations and numbers. Could there be a case of value unlocking in TVS?
We see growth revival across the two-wheeler sector versus the passenger or the commercial vehicles. People had this thought that maybe the two-wheeler segment is not growing, and there is an issue on the rural side. But the recent numbers, the festive season sales, clearly suggest that the two-wheeler growth is back. The new launches that are in the premium category have received a good response. In TVS, earlier, 40% of their portfolio had the risk of disruption because of the EV and it was not very clear as to how exactly the company is going to deal with it. But the way the company has responded to that and come out with various products, it looks very compelling, which is why TVS has been the best performing stock in the last about 12 months.
I think maybe there could be some excitement around the Ola IPO, but the core story is still looking good. But in terms of valuations, I still prefer a Bajaj or a Hero compared to a TVS because it has run up so much.After the RBI asked the NBFC to stop lending via e-COM and Insta EMI Cards with immediate effect, the Bajaj Finance stock had fallen, although the step was for just a 60-day period. But would you say there was any such decline in the rest of the NBFC pack? Should the dip in the private banking names also be bought into?
I think a lot of things are happening. The Bajaj Finance case was on Thursday. It was more like an operational issue. So I do not think the market was too perturbed by that. So that surely was not that negative. But RBI’s recent notification about increasing the risk weight, I think, would have some sentimental impact on the categories, like personal loans, unsecured loans because we will see a little bit of increase in the cost of funding. And it is warranted also. But on an overall basis, having seen the banking sector or Bank Nifty underperform the Nifty in the last two or three months, I think there may be a little bit of knee-jerk reaction. I do not think at a capital adequacy level or at an earnings level, there is going to be a significant impact.
I would surely look to buy into some of the banks, private banks or maybe an SBI at this point of time. And maybe some of the companies, like SBI Card, et cetera, could have a larger price impact because of the development on Thursday.
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