N V Chandrachoodamani
Chandrachoodamani started his capital market career in mid 2000s with Equity Intelligence India and then worked with several capital market Intermediaries in various roles over the last 15 years. Most of his career experience has been in equity research and PMS. Most recently, he was with MOAT, a PMS firm. He is a graduate in mathematics, a post graduate in finance, and holds a CFP certification. LinkedIn|Twitter
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22 thoughts on “Stock Recommendation : An engine maker with EV aspirations”
A breakout comes through in Greaves Cotton. Hope it becomes a good momentum play
Yes, the Co is getting noticed for its EV play. We are watching the progress on their businesses.
Dear N V Chandrachoodamani;
Thanks for your recommendation.
i have earned good profit on this stock. i have sold my partial qty and hung up with other till your sell call comes.
Good to hear that sir
We are watching the progress on the EV businesses. Will update our reco. based on that
Thank you
Dear Sir; The article was good and we come to know more about Greaves Cotton.
the only query which is bothering is why the prices of the stock is coming down day by day.
For we as investor; do we buy via SIP route ?
how much one can allocate in this company if their portfolio is of 15-20 stocks only ( i mean in %ge terms) & holding tenure as 3-5 years.
regards.
Thanks for your query sir
Being a mid-sized Co, the stock price has been volatile. Even around the time of recommendation, the stock moved up quickly after Govt increased the subsidy for EV 2 wheelers
So we had recommended to accumulate the stock in steps, on declines. The investment argument remain un-changed.
This being a mid-sized emerging growth Co, the investment amount should be lower compared to established large-sized Cos.
Thanks sir for your quick response
Thank you for the insightful report. I can see good coverage around electric vehicle segment. Also wanted to check how is core business of Company positioned? Will there be fall in this due to growth of electric segment? If yes, will this growing share of electric segment lead to margin erosion for the Company as a whole and overall still good for Company?
Appreciate your query sir
The Co has been consciously diversifying from automotive segment in the last 3 years. Even in automotive segment, it has introduced CNG and Petrol engines as well. Despite >60% slump in 3 wheeler sales in FY21, Greaves managed to end the year with 27% decline in sales, non-auto segments have picked up well. Greaves has also consolidated engine manufacturing at a single site (Aurangabad) to save on fixed costs. All these initiatives look promising as far as its core business is concerned. Also, CNG and Diesel are here to stay in passenger as well as cargo segments in heavy duty/rural area transport applications
EV business will be the key growth and valuation driver going forward
We have mentioned the present valuation as well as last 5 Yr PE band. Accumulating the stock in corrections can help to get it at reasonable valuations, manage any down-side well and look for upside from the EV business
Dear Chandra, Solid analysis. Guess if I invest, should be patient enough to hold for 3 years.
Thank you sir
Great report . I was looking for perspective on the EV business of Greaves . Clearly they are well positioned , have the first mover advantage along with Hero electric . However will they be able to take on the might of well funded Ola and Hero Motors Ather ? Would be great to have your perspective on the same .
Thanks you sir
It is very difficult to predict the order at this early stage. Greaves has built a team, product portfolio on low & high speeds and also 3W. This low speed segment also holds potential which is not covered much. Ather plays at premium end whereas Hero Motocorp’s own DNA is low end & affordable 100-125cc segment. Greaves is playing the low end space at affordable cost going further down to low speed ones. It is seriously expanding and building volumes
Even in the conventional segment, no Co is a leader in multiple segments. We have shared some of our observations in the report
So, early days to predict the winners or top 1,2 &3. Just need to see if the Co is doing right things and go with staggered allocation.
It may take 2 or 3 years to get visibility on top 1, 2 & 3 players in this space
Thanks for your perspective Chandra . Pls keep us updated priodically as EV is an evolving space .
Very nice analysis and introduction to this stock in EV play. Please continue to bring out such articles!!
Thank you sir
Hello Sir,
Thank you for very detailed report on emerging company . Sir Can u tell me which battery industry Is going to be in benifit.
Regards
Ram
Thank you sir
It is very tricky. In 2 and 3 wheelers, standardization may be possible and existing players may tap this opportunity. In the areas of public transport also we can expect some level of standardization
In case of passenger cars, it may not be easily possible. Design, cell chemistry, capacity and the engineering involved in assembly may vary with each Co and so we need to watch how it evolves
Hello sir,
Thanks for coming up this detailed rationale behind the recommendation.
On the EV landscape in 2 wheelers, the current incumbants like Hero and VC backed companies like Ola have a lot of cash to burn (almost in multiples) in comparison to Greaves Cotton. Do you see any competitive advantage that Greaves Cotton has that would enable it to gain market share in the next few years when more 2 wheeler companies with deep pockets and an existing distribution network start getting into this space?
Also, do you foresee Greaves Cotton getting to be part of the EV value chain like say supplying electric motors or any other components to different 2wheeler companies?
Best regards
Prashant
Thanks you sir
It is an evolving industry and is difficult to rate success of any Co. at this stage. And even in incumbents, no player is a leader in more than two segments. For each, there is a focus/niche. There is also a low-speed segment that is doing much higher volumes and the e-Rickshaws.
So, incumbents are not strong/successful across segments, each has their own focus/niche and there is this ‘Halo effect’ around some new entrants. Greaves is fully into the business with products, network, team and numbers.
This is always the case with emerging sectors and early entry in to such stocks comes with risk.
Dear Sir,
Thank you for the detailed analysis of Greaves Cotton. Certainly a very good investment case in a niche and emerging sector accompanies with its own risks.
Would like to understand your view regarding the recent strategic investment by Greaves in MLR Auto. Is it that competition is less in EV 3W space compared to 2W market.
Best regards
Sankar Venkidakrishnan
Thanks for your query sir
Greaves had already acquired an electric 3W Co last year based in Noida. It sells ELE electric rickshaw, which is a different product from conventional auto-rickshaw. Can have a look at its products at ele3w.com
Greaves had its DNA as diesel engine maker for 3Ws (Key supplier to Piaggio – APE Auto) and run a PAN India multi-brand spare parts network also. They seem to have a better understanding of 3W biz. So, their EV journey comprise of low speed 2W, high speed 2W and Passenger as well as Cargo 3W.
This acquisition of MLR Auto is a part of acquiring the “platform” required to launch the conventional auto-rickshaws that we see, predominantly in south India. It can save time and cost of building a platform from scratch
Hope his address your query sir, thank you
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