TVS Motor Company shares at the BSE jumped 8.6 per cent to Rs 39.75 during intra-day trade on Monday.

The rally is believed to be on the back of the news that the Chennai-based two- and three-wheeler maker is in talks with BMW Motorrad for a technology tie-up, as reported by Business Line on Sunday.

By the time trading closed on Monday, TVS’ shares were up almost 8 per cent to Rs 39.50 from the previous day’s close. Trading volume jumped to 14.96 lakh shares against the two-week average of 4.14 lakh shares.

“TVS Motor Company is only in talks with German auto-maker BMW's Motorcycle division, BMW Motorrad for a technology tie-up. However, nothing has been firmed up as yet,” the company filed at the stock exchanges.

The stock's 52-week high/low are Rs 70.30 and Rs 31.9 respectively.

Rules out equity sale

While equity sale has been ruled out by TVS Chairman, Mr Venu Srinivasan, a tie-up is expected to benefit both parties strongly. BMW will get a partner with domestic market expertise and access to a low-cost manufacturing base for smaller bikes (125cc, 250cc). TVS may get more premium technology for big bikes above 500cc.

“BMW has been scouting for partners for a long-while in India and has spoken to Hero Group before.

“Recently, an official had visited the TVS factory and the feedback had apparently been very good. If the deal goes through, we can expect results in the market by FY15,” an analyst with top brokerage house said.

Incidentally, TVS Motors is not part of the BSE Auto Index. On Monday, the BSE Auto index was the fourth worst performer — it fell 1.12 per cent against the BSE Sensex's fall of 0.74 per cent.

roudra.b@thehindu.co.in

(This article was published on July 9, 2012)
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