Shares of TVS Srichakra Ltd., a maker of two- and three-wheeler tyres, rose after it announced a capital expenditure plan.
The company plans to ramp-up manufacturing at its Madurai and Pantnagar plants through a capex of Rs 1,000 crore, to be made over a three-year period, it said in an exchange filing. The funding will be done through a mixture of debt and internal accruals.
“The investment, when fully made, will result in an increase in two- and three-wheeler tyre capacity by 25-30% and doubling of off-highway tyre capacity from current levels,” the company said.
“This is a positive move and it is on expected lines,” Mayur Milak of BoB Capital Markets told BloombergQuint over phone. “They have a 30% market share in the two-wheeler segment and this is in line with their growth perspective.”
The expansion programme will focus on setting up additional capacities to cater to growing demand across the company’s domestic and global customer base, the company said. The capex will also include a plan to enhance capacities in the company’s radial tyre range and other premium products.
“We believe that this capital outlay will enable TVS Eurogrip to further its growth aspirations and help strengthen its partnerships with vehicle manufacturers and create new benchmarks in the replacement and global markets,” S Ravichandran, the company’s director, was quoted as saying.
Shares of the company rose as much as 6.2% to Rs 1,715.2, the highest since Feb. 11, after the announcement. The average of 12-month price targets complied by Bloomberg imply a potential upside of 8.5% for the stock from current levels.