Markets
Automobile Corp of Goa: Should you invest in this high-flying Tata Group stock?
Summary
- The company, which manufactures, assembles and presses sheet metal components for bus coaches, has been on a tear of late. Its stock hit an all-time high of ₹2,861 on the BSE on 31 July.
Tata Group company Automobile Corp of Goa was a standout performer in the fourth quarter of FY24, with profit growth of 41% driven by 25% sales growth. Market participants were tracking the company and how it would perform in the following quarter, and it did not disappoint.
The auto ancillary company posted robust growth In the first quarter of FY25, causing its stock to hit an all-time high of ₹2,861 on the BSE on 31 July.
The company manufactures, assembles and presses all types of sheet metal components for bus coaches. It supplies these pressings and assemblies to Tata Motors, which has a 47% stake in the company.
Key takeaways from Q1 results
Automobile Corporation of Goa’s stock hit the upper circuit on 31 July after the company posted 77% growth in its net profit to ₹179.1 million in the first quarter from ₹101 million a year ago. Revenue jumped 35% to ₹2.1 billion.
Net profit and sales have now seen good growth for the fourth consecutive quarter. The company’s long term performance is quite extraordinary, and sales and net profit have grown sharply between FY22 and FY24.
Plans and growth prospects
Auto Corp of Goa is a part of Tata Motors's electric bus and hybrid bus programme, making buses that meet the company's domestic and international requirements. The stock’s recent performance could also be due to the company producing electric buses.
It has a capacity of around 9,000 vehicles a year, and its current capacity utilisation is 70%.
With electric buses increasingly being used by state transport undertakings, the company is gearing up to upgrade its manufacturing facilities and engineering capabilities to manufacture next-gen buses, including electric ones. Its line-up includes new models of electric buses and a prototype of an electric double-decker bus.
The company is also optimistic that the listing of Tata Sons will unlock value. Auto Corp of Goa doesn’t hold a direct stake in Tata Sons, though it is promoted by Tata Motors, which has a 3% stake.
How the stock has performed
In the past five days, the stock has surged 24%. Over the past month it’s up 20%. The stock’s 52-week high is ₹2,861 and its 52-week low is ₹1,250, which it hit on 10 August 2023. So far in 2024, shares of the company have rallied 104%.
Here’s how it compares with its peers.
If you’re interested in this stock, do check out Equitymaster’s Stock Screener, which has a separate section for the best Tata group stocks.
Happy Investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
