Force Motors dips on profit booking

The stock has gained over the past month on the back of expectations of improved financials, new product launches and plans for a new facility in Chennai for assembly of BMW engines.

Force Motors has dipped 4% to Rs 1,229 on BSE on profit booking. The stock opened at Rs 1,292 and touched a low of Rs 1,170 so far. Around 519,000 shares changed hands on the counter so far against an average 676,000 shares that were traded daily in past two weeks on BSE.

Shares of Force Motors, a leading manufacturer of passenger and commercial vehicles, had witnessed a sharp appreciation in its stock price over the past month on the back of expectations of improved financials, new product launches and plans for a new facility in Chennai for assembly of BMW engines.

The stock had appreciated 61% from Rs 794 on August 28 to Rs 1,281 till yesterday. The benchmark S&P BSE Sensex gained less than 1% during the same period.

Though the growth outlook remains positive on the back of the incremental revenues from its Chennai plant for BMW, technical tie-ups and the proposed introduction of new LCV platform, but we believe that the stock has run ahead of its fundamentals. Consequently, we advise investors to book profits, says analyst at Sharekhan.

A higher than expected ramp-up in the BMW business and better than expected margins (though we had assumed margins that are higher than the historical trend) could result in an upside to our estimates, said analyst in report dated September 23, 2014.