Force Motors

The stock price had skidded into the red post the net loss it posted for Q3FY14. The company which makes and sells vehicles under the name of  Tempo, Matador & Traveller, as against expectations of good numbers, posted a net loss of Rs.8 crore v/s net profit of Rs.8 crore in FY13. And this was against a record profit of Rs.27 crore in Q2FY14. In Q2 too, the company had a loss at the operating level but other income had come to the rescue and then a tax write back of Rs.23 crore. This time around too, operating costs at Rs.503 crore were much ahead of the net sales which came in at Rs.475 crore. Though it had other income at Rs.9 crore, it was not enough to get into the green.

This Pune based company, making LCVs, buses, tractors and sports utility vehicles, currently has a market share of 50% in the 6-20 seater segment and its target is to get a market share of around 20% in the 20-30 seater segment. It plans to sell 1,300 vehicles in this category. It has earmarked a capex of Rs 1,000 crore for capacity expansion and new model roll-out. It is revamping its tractor segment and plans new launches there too. At the Auto Expo, the company has planned marketing activities for the Gurkha, an off-road SUV. For now, despite all new vehicle launches, nothing will lift the stock price till earnings get better. Given the sluggish demand, the numbers will continue to remain a suspect.