Force Motors surges 10%, hits over 4-year high; zooms 129% in 3 months

Shares of Force Motors (FML) hit an over four-year high of Rs 2,570.55, as they rallied 10 per cent on the BSE in Tuesday’s intra-day trade amid heavy volumes on expectation of healthy sales momentum in June. The stock of passenger cars & utility vehicles company was trading at its highest level since August 2018. In past three months, it has zoomed 129 per cent, as against 10 per cent rise in the S&P BSE Sensex.

Thus far in the month of June, the stock has surged 43 per cent after the company reported 30 per cent year-on-year (YoY) and month-on-month (MoM) jump in total sales at 2,645 units in May month. In the year-ago period, the company had sold a total of 2,026 units, whereas last month, it sold total of 2,042 units, the company said.

The company’s exports sales nearly-doubled on a MoM basis to 491 units in Ma, against 166 units sold in export market in April 2023. On YoY basis, export sales grew 54.8 per cent from 317 units sold in May 2022. The company’s domestic sales were up 14.8 per cent MoM and 26 per cent YoY at 2,154 units.

Meanwhile, for the financial year 2022-23 (FY23), FML had reported a standalone net profit of Rs 152 crore, against net loss of Rs 74.60 crore in FY22. Revenue grew 55 per cent to Rs 5,029 crore from Rs 3,240 crore. This recovery was aided by healthy volume growth in commercial vehicle (CV) segment. The auto components business has also performed better backed by gradual recovery in volumes for original equipment manufacturers (OEMs).

FML is a flagship company of the Abhay Firodia group. The company is fully vertically integrated manufacturer of small and light commercial vehicles (LCVs), multi-utility vehicles, and agricultural tractors.

Under the auto components division, engines are assembled for Mercedes-Benz India and BMW India. The primary brands in LCVs and multiutility vehicles include Traveller, Trax, Gurkha and Shaktiman, while the brands in tractors are Balwan, Orchard, Abhiman and Sanman.

As on March 31, 2023, FML has total 13.18 million outstanding equity shares, of which 8.12 million or 61.63 per cent are with the promoters. The remaining 38.37 per cent holding are with individual shareholders (28.75 per cent), foreign portfolio investors (2.72 per cent), bodies corporate (1.51 per cent) and others (5.39 per cent), the shareholding pattern data shows.

CRISIL Ratings in its February 2023 rationale believes FML will continue to benefit from its leadership position in niche products segments, revenue diversity and stable operating profitability. Furthermore, the financial risk profile will improve over the medium term, with limited increase in total debt in future because of healthy cash accrual vis a vis progressive loan repayments and financial flexibility of the Abhay Firodia group.

FML focusses on the niche passenger segment of LCV. In the LCV school buses and ambulances segment, the company has a market share of over 70 per cent. The company will continue to benefit from its niche positioning in the auto OEM market, supported by the steady launch of new products and variants and rise in demand in the LCV segment, CRSIL Ratings said.