Greaves Cotton soars 11%, hits all-time high; stock up 40% so far in Jan

Shares of Greaves Cotton hit an all-time high at Rs 193.30, surging 11 per cent on the BSE in Monday’s intra-day trade on the back of heavy volumes. The stock surpassed its previous high of Rs 184.25 registered on June 24, 2021. At 10:21 am; the stock traded 9.5 per cent higher at Rs 191.10, as compared to 0.90 per cent rise in the S&P BSE Sensex. A combined 11.8 million equity shares had changed hands at the counter on the NSE and BSE.

Thus far in the month of January 2022, in six trading days, the stock has zoomed 40 per cent after the company’s arm Greaves Electric Mobility, a leading electric two and three-wheeler manufacturer, sold over 10,000 units in December 2021.

Greaves Cotton’s e-mobility arm Greaves Electric Mobility on January 2 said it sold over 10,000 units in December 2021. This includes both electric 2-wheelers (E2W) and 3-wheelers (E3W) segments. Ampere, fastest growing e-mobility brand, reported a record growth of almost 6 times revenue growth in December versus the same month last year and E3W business grew by 101 per cent in volume terms, the company said in statement.

It said that the October-December quarter (Q3) quarter 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 Ranipet mega EV factory, one of the biggest EV factories in the country. Ampere vehicles have received significant demand in the market.

In November, Greaves Electric Mobility had inaugurated its largest EV production facility in Ranipet, Tamil Nadu. The plant is part of the Rs 700 crore investment roadmap announced by the Company to expand its growing share in the Indian electric vehicle market. The company currently enjoys the fastest growing market share in a keenly contested electric mobility segment, the company had said.

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 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.

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.

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