TVS Motor Company Ltd. share price target

Despite strong volume performance, TVS Motor (TVSL) has delivered a subdued operating performance in 1QFY19 primarily owing to higher input cost, increased dealers' margins, competitive intensity and discontinuation of Excise Duty benefit from HP plant. Its revenue, EBITDA and PAT grew by 22% YoY (+4% QoQ), 45% YoY (+9% QoQ) and 13% YoY (-11.5% QoQ) to Rs41.5bn, Rs3bn and Rs1.47bn, respectively. Its EBITDA margin expanded by 116bps YoY and 35bps QoQ to 7.3%. Volume grew by 16% YoY and 4% QoQ to 9,28,274 units on a low base, while average realisation grew by 6% YoY. Its RM/sales increased by 160bps YoY and 240bps QoQ to 76.2%, while other expenses/sales declined by 232bps YoY and 278bps QoQ to 10.7%...

Q4FY18 revenue grew by 40%YoY due to 32% volume growth and superior product mix. PAT grew by 31%YoY. EBITDA margin expanded by 130bps despite combination of higher raw material price and Employee wage cost. Increased penetration in the High margin premium motorcycles is becoming a game changer for the company. The category (>150cc) grew by 95%YoY. We expect the Revenue /PAT to grow by 19%/33% over FY18-20E led by 16% CAGR in volume growth and superior product mix....

TVS motors (TVSL) 4QFY18 results, were below our and consensus estimates on operating level. EBITDA margin were lower due to higher RM cost, minimum wage increase, increase in import duty, product launch in 4QFY18 and Auto Expo expenses. Increase in RM cost and higher import duty on components led to increase in cost by 1.2%. Tamil Nadu and Karnataka state govt. increased the minimum wage which led to increase in cost by ~0.3%. TVS recently launched...

During Q4FY18, TVS Motors (TVS) net sales grew 40.4% YoY to Rs39.9bn vs our estimates of Rs38.2bn, driven by 31.7% volume growth and a 6.5% increase in Average Realizations. Its EBITDA margins expanded by 135ps yoy to 7% but were below our estimates of 9.5% and PAT grew by 30.6% to Rs1.6bn but below our estimates of Rs. 2.4bn.

Revenue rose by 8.35% to Rs. 3992.76 Cr in Q4FY18 when compared to the previous quarter. TVS Motor Company Ltd Q4FY18 Results Comment

Volumes grew32% YoY (+7.6% QoQ) to 889.1k units. Realizations rose 0.7% QoQ (+6.3%YoY) to INR44.9k (in-line) due to a favourable mix. Gross margin of 26.2%(est. of 27.1%) contracted by ~110bp QoQ (+130bp YoY), primarily due to~120bp impact of RM inflation. EBITDA margin of 7% came in below our estimate of 8.1% due to RM inflation, higher staff cost (+30bp, due increase in minimum wages in TN/Karnataka) and ~50bp impact of Auto Expo & new product launches. Further, higher depreciation and interest cost restricted PAT growth to ~31% YoY (INR1.65b v/s est. INR1.74b).

We are positive on TVSL on the back of ongoing traction on volume across segments, success of new products leading to steady rise in brand equity, improving margin profile and imminent opportunities from BMW products. In our view, TVSL is better-placed in domestic two-wheeler space with strong product portfolio at present and additional benefits from BMW tie-up. Valuing...

Recently, the stock price of TVS Motor Company Ltd. (TVS Motor) corrected by ~22% from 52-week high of Rs.795 despite reporting good set of numbers in the recent quarters. TVS Motor is the 4th largest 2-wheeler manufacturer with a strong presence in the scooter segment. Its scooter segment has surpassed the growth of the motorcycles segment over the past couple of years and currently contributes 30% to the total 2-wheeler volume. Volume growth of TVS Motor attributed to good response to new products in domestic...

Despite gross margin improvement, Q3FY18 EBITDA margin at 7.8% (+50 bps YoY/ -90 bps QoQ) missed our/consensus estimate of 8.2%/8.0% due to higher other expenses. Management reiterated its target of double digit margin in Q4FY18.

TVS Motor Company Ltd Q3FY18 results comment Revenue fell by 9.07% to Rs. 3684.95 Cr in Q3FY18 when compared to the previous quarter