TVS Electronic Gains from Cashless India Movement

After the Demonetization move by Indian Prime Minister Narendra Modi, first week of December saw a nationwide campaign of ‘less cash to cashless’. A recent report by Google India and Boston Consulting Group proved that about 75 percent of transactions in India were cash-based as of last year. Cash is a clear winner; more so because 80 percent of people don’t have access to the internet. A feasible infrastructure needs to be in place in order to aid online transactions. And that doesn’t just happen through the government alone, but also depends on companies that strive to educate the next billion and guide the ship. The growing shortage of physical cash in circulation have started affecting small businesses negatively, slowing down the purchasing and producing capacity, which is bound to have a ripple effect on society. In fact, early implications of this are already visible around.

TVS Electronics gain:

The next important thing for a better working cashless India apart from Educating the population is an infrastructure. TVS Electronic is the only company that manufactures cashless payment machines. The cashless payment drive has benefitted TVS Electronics in a massive way. Since December 8^th, TVS Electronics share price has gained approximately 21% till the 12th December trade.  Today, TVS Electronics traded at the new lifetime high value for three straight trading sessions. Today, the stock traded at the new lifetime high of Rs. 231.90. Since 22^nd November 2016, TVS Electronics share price has gained immensely. The stock has risen over 138% from Rs. 89.90 on 22^nd November to Rs. 214.10 on 13^th December.

About TVS Electronics:

TVS Electronics is a part of the TVS Group, India’s leading and well recognized self-owned Business group. It is headquartered in Chennai and was founded in 1986 as an IT Peripherals manufacture. Today the company has today transformed into a leading Transaction Automation IT Product manufacturer & service provider.

The company has posted a significant rise in its Q2 results for the ongoing financial year. The sales have gone up 562% QoQ and 274% YoY. The company has also posted a higher net profit in the September Quarter for the ongoing financial year. TVS Electronics have posted the profit of Rs. 2.16 crores in Q2FY17 as compared to the loss of Rs. 2.01 crores in the June quarter and the profit of Rs. 1.35 crores in the Q2FY16.

Q2 FY17	Q1FY17	Q2FY16
Sales	721.16	108.9	192.47
Total Expenditure	718.37	110.47	189.59
Operating Profit	2.79	-1.57	2.88
Interest	0.72	0.66	1.61
Tax	0.09	-	0.38
PAT	2.16	-2.01	1.35
EPS	1.16	-1.08	0.75

Current Ratio	1.48
Quick Ratio	0.97
Dividend Yield	0
Interest Coverage Ratio	3.29
Debt Equity Ratio	0.68
Return On Asset	2.12
Return On Equity	9.6

The key ratios convey that the company has not paid out any dividends and has good financial leverages. TVS Electronics has a good debt-equity ratio as well. 

The stock has witnessed the highest traded quantity yesterday of approximately 29 lakh at the low of Rs. 198.05 while the highest deliverable quantity for the month was seen at the low of Rs. 186 on 9^th December 2016.

Conclusion:

The movement of the stock leaves no doubt that the Cashless India campaign has benefitted TVS Electronics massively. The company has gained and so has the stock since the demonetization for it is the only one that makes the cashless payment device. TVS Electronics is the top 500 recommendation for the quarter by Dynamic Levels website.