ICICI Direct's research report on Greaves Cotton
Recent announcement by Department of Heavy Industries (DHI) for modification of the scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME-II), including increasing the demand incentive to ₹15,000 per KWh from the earlier uniform subsidy of ₹10,000 per KWh for all EVs (including E-2W, E-3W) including plug-in hybrids and strong hybrids, except buses and the limit on the incentives for an E-2W is now capped at 40% of its price, twice the previous limit of 20%. Besides these incentives, various state governments are providing additional incentives to drive faster EV adoption, such as additional subsidies on EV purchase, increased outlay for EV infrastructure, promoting EV start-ups, and exemptions from registration and other fees that are applicable to normal internal combustion engine (ICE) vehicles. Ampere has passed on the benefits to the customers by reducing prices by 12% to 14% for its high speed Models like Zeal and Magnus E-2W vehicles which will further aid penetration and propel growth for EV business of Greaves Cotton (GCL).
Outlook
Consequently, we value GCL’s base business at 19x FY23E EPS and Ampere, Bestway at 5x FY23E Sales and maintain BUY rating on the stock with a revised target price of Rs 210 (earlier TP Rs 160).
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