Greaves Cotton rises to the highest level on the back of large volumes

Greaves Cotton rises to the highest level on the back of large volumes

Shares of Greaves Cotton hit an untouched high of Rs 209.45 each, prior to shutting higher by 19.91 percent at Rs 209.30 on the BSE on the rear of weighty volumes. The stock outperformed its past high of Rs 184.25 enlisted on June 24. In the six exchanging days January, the stock has zoomed 51.7 percent after the organization’s arm Greaves Electric Mobility, a main electric two and three-wheeler producer, sold north of 10,000 units in December.

It said the December quarter (Q3) was significant from many perspectives for Greaves Electric Mobility, with the company acquiring 100 per cent stake in electric 3-wheeler company ELE (e-rickshaws) and completing acquisition of 26 per cent stake in another electric 3-wheeler company MLR Auto (Teja brand), along with the launch of a mega EV factory in Ranipet in Tamil Nadu, one of the biggest such factories in the country.

Ampere, the fastest growing e-mobility brand, reported a record growth of almost 6 times in revenue in December versus the same month last year and E3W business grew by 101 per cent in volume terms, the company said in a statement.

Inaugurated on November 23, the Ranipet plant is part of the Rs 700 crore investment road map announced by the company to expand its growing share in the Indian EV market. It will have a capacity of 120,000 units by the end of financial year 2021-22 (FY22). Greaves Mobility currently enjoys the fastest growing market share in a keenly contested electric mobility segment, the company said.

Meanwhile, rating agency India Ratings and Research (Ind-Ra) believes that electrification could substantially pick up in the 2W and 3W segments in three-to-four years, led by the following factors: the reduced upfront pricing differential between an internal combustion engine 2W and e-2W post the increase in the subsidy for e-2W under Faster Adoption and Manufacturing of Electric Vehicles II by 50 per cent to Rs 15,000/kWh in June 2021, no significant requirement of battery charging infrastructure, low operational cost, amid increasing cost of ownership for internal combustion engine vehicles, due to increase in fuel costs and prices undertaken by OEMs on account of increasing material costs.

With e-mobility forming 24 per cent of Greaves Cotton’s overall revenue in Q2FY22, the diversification has de-risked the portfolio significantly amid a slump in the traditional business. However, the long-term driver continues to be various growth segments across fuel types that the company focuses on, analysts at Edelweiss Securities had said in the Q2 results update.
With a robust portfolio of products, focus on scalability across distribution and supply-chain remains key in the near to medium term. While October remains strong for the e-mobility portfolio, turning profitable is key to a rerating. We will watch out for competition from large players within e-mobility, the brokerage firm had said.

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