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Atul Auto shares jumped by 16 per cent on the Bombay Stock Exchange (BSE) on Thursday amid heavy fund buying. The sharp jump in the share prices follows the 2.83-lakh share purchase by global asset management giant, Goldman Sachs Asset Management Company on Wednesday.
Last week, on November 19 and 21, in separate purchases, domestic mutual funds bought a combined 5 lakh shares of the company. In past five trading sessions, company shares have surged by close to 30 per cent. On Thursday, Atul Auto shares hit a 52-week high at Rs 539.90 before closing at Rs 528.55 on BSE.
The company has lined up Rs 150 crore capex for setting up a new 3-wheeler plant near Ahmedabad. "We are a debt-free company and using mostly the internal accruals for expansion project. In the past five years, we have growth by 25 per cent CAGR, and we have set a target to grow about 20 per cent in coming years," Jitendra Adhia, VP-Finance, Atul Auto told BusinessLine.
This has attracted fund houses to pick up more shares in the company. As per the company's filings, mutual funds and institutions had a combined holding of 6.20 per cent as on September 30, while the same was just 2.21 per cent in June quarter. So far in the current quarter, three big mutual fund houses, HDFC Mutual Fund (3 lakh shares), Birla Sun Life Mutual Fund (3 lakh shares), Birla Mutual Fund (3 lakh shares) have picked up large quantities.
To achieve higher growth, the company is set to launch its petrol-based three-wheeler vehicle by the next quarter of this fiscal or the first quarter of the next fiscal.
"Overseas market has different requirement than the domestic market. Gasoline products are more acceptable in these markets, and also with bigger domestic market of petrol models than the diesel models there is much potential for growth," he said.
The new model will be manufactured at the company's existing plant and the new plant that is coming up near Ahmedabad. "Work on new plant will start in next one quarter and we expect to commission the plant in the next two years. The new plant will have the manufacturing capacity of about 60,000 units per annum," he said adding that the company is currently selling about 45,000 units per annum.
On pricing of the new product, Adhia mentioned that Atul Auto will be a follower of the peers already present in the petro-based three-wheeler market.
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