Tata group stocks have delivered decent returns in 2021, with the share prices of most of the group firms outperforming the benchmark indices during the period. The biggest gainer was Automotive Stampings and Assemblies, which surged nearly 2,800% in the last 12 months, as compared to 22% growth in the BSE benchmark, Sensex.
This stock turned ₹1 lakh into ₹28.80 lakh in one year
This lesser-known Tata group company skyrocketed 2,780% over the last one year to ₹881.40 apiece on Monday from ₹30.6 apiece as of January 11, 2021. Investment of ₹1 lakh in Automotive Stampings and Assemblies stock at the beginning of 2021 would have grown to ₹28.80 lakh in just a year.
The share of the auto ancillary company, which was trading in a narrow range in the first six months of the year, surged 1,160% during the last six months after it turned profitable in the September quarter of the current fiscal. The plan to boost production capacities by setting up a new manufacturing unit at Chakan, Maharashtra, also augured well for the stock.
Stock rallies despite weak financials
Though there is hardly any correlation between its share price and its financial performance, but the recent rally has grabbed investors’ attention. The sheet metal components manufacturer, which sells its products to Tata Motors, General Motors India, Piaggio, and Ashok Leyland, wasn't profitable in the last twelve months due to slowdown in the end-user industry coupled with disruption in operations due to the nationwide lockdown announced to contain the spread of Covid-19.
Reversing the trend, it reported a net profit of ₹0.40 crore for the second quarter ended September 2021 as against the net loss of ₹8.97 crore during the same period last year. Sales rose 91.63% to ₹147.92 crore in Q2 FY22, from ₹77.19 crore in the quarter ended September 2020.
For financial year ended March 31, 2021, the Tata group company posted net loss of ₹29.70 crore compared to loss of ₹17.01 crore in the year ago period. Net sales dropped to 6.5% to ₹339.13 in FY21, from ₹362.40 crore in FY20.
This stock gained 178% in one month
The share of the Tata group-owned company, which makes skin panels, suspension products, and fuel tanks for vehicles, has been gaining for the last 21 sessions and has zoomed 178.32% in this period. Over the last one week, it has risen 27.6% against 1.78% gain in BSE Sensex.
On Monday, Automotive Stampings shares opened higher and hit an upper circuit limit of 5% at ₹879.9. This also marked a fresh 52-week high for the stock. The market capitalisation of the Tata group arm rose by ₹7.42 lakh to ₹1,395.91 crore.
According to stock research platform Markets Mojo, the smallcap stock was trading risky as compared to its average historical valuations. Despite negative book value, the stock was trading higher than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages.
The stock witnessed a fall in investor participation with delivery volume falling by 95% on January 7 against 5-day average delivery volume, as per the research platform.
CRISIL upgrades rating
In October last year, CRISIL upgraded the ratings on the bank facilities of Automotive Stampings and Assemblies, citing strong business and financial support from parent, TATA Autocomp Systems (TACO), and other group companies.
The agency also raised rating on long-term borrowings of the company to “BBB” from “BBB-“, with stable outlook. It also reaffirmed CRISIL A3 rating for short-term borrowings of the company.
All you need to know about Automotive Stampings and Assemblies
Formed on March 13, 1990, as JBM Tools, the company was later renamed as Automotive Stampings and Assemblies on August 1, 2003. Currently, Tata Autocomp Systems holds a 75% stake in the company and the balance of 25% is owned by the public.
Automotive Stampings manufactures and supplies sheet metal components, welded assemblies and modules for automobiles, including body-in-white (BIW) structural panels, skin panels, fuel tanks, rear twist beam, oil sumps and suspension parts for automobile and offload vehicle segments. The company sells its products to top automobile companies such as Tata Motors, General Motors India, Fiat India, Piaggio Vehicles, Ashok Leyland, JCB, Tata Hitachi & MG Motors.