Analysts Expect Force Motors' To Touch Rs. 3150 By FY17

On Thursday, October 8, shares of Force Motors touched a peak of Rs 3051, with a recorded rise of 7.7%. This marked the sixth consecutive round of trading where the stock had registered growth. Further, since the beginning of this month, the share value had risen by nearly 30%, marking a positive trend for the future. With the company's stocks setting an affluent note, analysts from across the industry debated over the brand's future and forthcoming expectations for its shares.

Daljeet Singh Kohli, a professional from India Nivesh Securities, conducted an indepth analysis of the trend. “We started Force Motors at Rs 568 in August 2014,” he states, underlining the immense growth that the company had seen over the past one year. “The stock has already moved five to six times from there. We are still bullish and believe that by FY'20, it can be actually another three to four times from here.” he adds.

Force Motors is among the known players in the Indian CV space. It operates with its base in Pune, and conducts its manufacturing in a state of the art facility in Pithampur, Madhya Pradesh. Recently, it set up a new plant in Chennai, where it began building engines for international brands such as BMW and Mercedes-Benz. Mr. Singh Kohli regards this as the downside that the corporation faces, with 30% of its current revenue coming from auto component services. “This right now is around 30 percent of the company and 67-68 percent is the other SUVs, ambulances and buses, etc. So, this ratio will reverse in FY'20 where the auto component business will become 68-70 percent, whereas 30 percent will come from the traditional business of tempo traveller, buses, school buses and ambulance.”

He goes on to estimate future earnings from the company's stock: “If the company show the earnings growth of 30 percent compounded annual growth rate (CAGR) over next four or five years, then obviously the price to earnings ratio (P/E) multiple will also expand with that kind of number. So, that is the idea of giving a target of around Rs 10,000 by FY'20. But if you see the near-term visibility of FY'17, the we have given a target of around Rs 3,150 which is 20 times of FY'17 earnings.”