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TVS Motor up 11% on reports of company exploring investment for EV arm

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TVS Motor up 11% on reports of company exploring investment for EV arm

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TVS Motor Company shares jumped 10 percent on Tuesday after a media report said some global investors might invest in the two-wheeler company’s electric vehicle subsidiary. Morgan Stanley said, "Given TVS' market cap of $4.5 billion, successful execution of the deal could re-rate the stock".

TVS Motor up 11% on reports of company exploring investment for EV arm
TVS Motor Company shares jumped 10 percent on Tuesday after a media report said some global investors might invest in the two-wheeler company’s electric vehicle subsidiary.
Earlier today, the stock was locked in its upper circuit limit at Rs 783.40. At 9:44 am, the stock was trading 11 percent higher at Rs 790.5. It hit a 52-week high at Rs 793.45 today, and has been gaining since the past 8 days, rising 25 percent during the period.
TVS Motor is in talks with a clutch of global private equity investors to raise $300-500 million (Rs 2,220-3,700 crore) for its electric vehicle subsidiary at a valuation of $3.5-4 billion, the report said.
In the second half of October, TVS Motor had carved out a subsidiary for electric vehicles.
The flagship company of TVS Group is seeking to raise the funds from pure financial investors and has no plans to onboard strategic investors, the report added.
Morgan Stanley said, "Given TVS' market cap of $4.5 billion, successful execution of the deal could re-rate the stock".
Currently, TVS Motor sells around 500 EV units a month (5-month average) and has about 4 percent market share in EVs.
This development comes after Tata Motors' announcement that the US-based private equity major TPG Capital will invest Rs 7,500 crore in the company's new electric vehicle subsidiary.
TPG Capital's new climate-focused financial fund, TPG Rise Climate, along with co-investors shall invest Rs 7,500 crore in compulsory convertible instruments to secure between 11 to 15 percent stake in this company translating to an equity valuation of up to $9.1 billion.
Investors are lately preferring companies that have the capability to capitalise on the electrification opportunity.
Year-to-Date, shares of Tata Motors have soared 176 percent while those of TVS Motor have gained 63 percent.
Saurabh Mukherjea, Founder, Marcellus Investment Managers said, “On where we are in the auto cycle, as is evident from the heavy goods vehicle numbers, from the three-wheeler numbers – it’s actually decent demand pickup because of supply side constraints the cars market is being held back”.
“The demand pickup for auto at this juncture, the cycle is pretty decent, and I am sure two-wheeler manufacturers will participate in auto recovery over the next couple of quarters. So I don't have that much concern about the sector struggle from a cyclical perspective, but the structural story on internal combustion engine versus electric vehicle (ICE versus EV), I don't think we have got a clear view on it in Marcellus,” Mukherjea added.
 
 
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