Tube Investments: Healthy early traction for EVs

14 Mar 2024 , 11:18 AM

TIINDIA is targeting a revenue of US$1bn with high singledigit margins from its EV business in five years. The traction for the first two segments – EV 3Ws (32% market share in South) and HCV – is encouraging and should benefit from the expanding distribution, now that the manufacturing base is in place. The next one year should see launches of cargo 3W EVs, e-SCV by 3Q24 and 27hp EV tractor by end-2024. Meanwhile, core standalone business has some headwinds from slowing domestic auto growth even as other segments (Exports, Large Dia Tubes, Railways) provide some offset. Analysts of IIFL Capital Services retain estimates and their ADD rating.

Healthy traction in EV 3W:

With a sale of 461 units of EV 3W (L5, passenger) in Feb’24, TICMPL has raised market share in the segment to 6.6% within a year of launch. This has come almost entirely from South where the company had reported 32% market share (MS) in Jan‘24 (media reports) given that the distribution network has only recently expanded beyond southern states to 53 dealers, as of 13- Mar-24. It is targeting aggressive expansion into the larger states in North and West, given the production/supply chain issues are sorted.

55T EV truck sales picking up:

Vahan data indicates that TICMPL has sold 124 units of the 55T EV HCV till date since the launch in mid2023. The 185km range and 90-min charging time makes it suitable for point-to-point transportation and given the price and use case, these sales numbers are encouraging. Early demand has come from large manufacturing corporates with focus on the greening of supply chain; but TI should see further uptick in penetration as large fleet owners recognise the gains with regard to economics.

Core business-subdued domestic auto partially offset by other segments:

TI’s core standalone business would see headwinds from the weak medium-term growth outlook for domestic auto (vs FY22-23) across 2W/PV/CV. This would be partially offset by healthy growth outlook for large dia tubes (infra equipment), railway coach sections, exports (tubes & chains on a low base) and aftermarket chains. Gains from lean initiatives should aid profitability, OCF and RoCEs.