TVS Motor is the only two-wheeler auto company whose share price has risen in the last one month.
Shares of TVS Motor rose 7.8 percent, while Bajaj Auto and Hero MotoCorp lagged, losing 2.4 percent and 4.9 percent respectively.
Shares of TVS Motor are trading at a P/E (price to earnings) ratio of 23.9 times Bloomberg consensus forward earnings which is at a 40 percent premium to Bajaj Auto's valuation of 17.3 and Hero MotoCorp's valuation of 16.9.
Despite a strong beat in Q2FY17 financials, analysts are concerned about the incremental market share growth of TVS Motor, with rising competition in key segments, a weak margin profile compared to peers, higher advertising spends, gaps in the product portfolio and most importantly, stretched valuations.
In fact, according to Bloomberg, 62 percent of analysts polled have a ‘sell' rating on the stock. 26 percent have rated the stock a ‘buy', and 12 percent recommend a ‘hold'. The 12-month consensus target price of Rs 338 indicates a 17 percent downside potential.
Going by analysts' expectations the stock is ripe for a correction.
But then, analysts were wrong about Biocon, which continued to hit new highs despite the lack of analyst interest in the stock.
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