TVS Motor Company Ltd. share price target

TVS Motor's 3QFY18 EBITDA margin improved by +50bps yoy (-80bps qoq) to 7.8% (IDBI Est: 7.0%; Consensus Est: 7.9%), led by better scale and favorable product mix. Management expects strong volume growth and market share gains in domestic motorcycles/scooters, driven by network expansion and new launches. Company expects to launch new motorcycle and scooter in 4QFY18 and maintain its double digit operating margin guidance for 4QFY18. We expect revenue to grow at 18% CAGR over FY17-20E, led by 12% CAGR in volume. Margin is likely to expand by 100bps over FY17-20E, driven by better scale, increased penetration in high-margin...

Sector: Auto /Mid-Cap | Earnings Update 3QFY18 Background: TVS Motors Company Limited , the third-largest two-wheeler manufacturer in India, is a part of TVS Group; it manufactures motorcycles, scooters, mopeds and three-wheelers in India. TVS Motors is credited with many innovations in the Indian automobile industry, notable among them being the introduction of India's first two-seater moped, the TVS 50cc. The company has presence in all the three sub-segments of two wheelers, i.e., motorcycles, scooters & mopeds as well as the three-wheeler segment. Motorcycles, scooters, mopeds and three-wheelers contribute 38%, 23%, 35% and 4%, respectively, to overall volumes ....

Earnings call highlights: a) Management maintains double-digit margin target by 4QFY18. b) Taken price hike of INR250/unit in Sep-17; further price increase expected in future to pass cost inflation. c) New launches in motorcycle and scooter segments in 2HFY18 (incl. electric scooter). d) Growth momentum in exports to continue. e) Post acquiring 100% stake in TVS Motor Services, it has 85% stake in TVS Credit Services (NBFC arm). f) Proposed interim dividend of ~INR2/share (v/s FY17 dividend of INR2.5/sh). Valuation view: We upgrade EPS for FY19/20E by 5%/3%, driven by upgrade...

Revenue increased by 19.51% to Rs. 3399.51 Cr in Q1FY18 when compared to the previous quarter Revenue increased by 19.51% to Rs. 3399.51 Cr in Q1FY18 when compared to the previous quarter

Revenue fell by 4.66% to Rs. 2844.5 Cr in Q4FY17 when compared to the previous quarter. On the other hand it increased by 1.69% when compared with Q4FY16.

Q4FY17 results were impacted by one-time discounts (Rs 570 mn) to clear unsold BS-3 dealer inventory. This hurt margin by 200 bps; adjusting for this, margin at 7.7% (+50 bps YoY) was in line.

A comprehensive product portfolio with good market acceptance of new products and steady growth in sales has enabled TVS Motor Company to post a 2.0% revenue growth during the financial year Q4FY17. During the quarter the...

Revenue decreased by 12.98% to Rs. 2952.85 Cr in Q3FY17 when compared to the previous quarter. On the other hand, it increased by 3.06% when compared with Q3FY16.

Margin target Visibility in question: The company's original target had been 10% margins by FY18. For 9MFY17 however, while revenues have risen 12%, 9MFY17 margins have expanded just 20bps to 7.5%. Further, margins have been boosted substantially by an accounting change that reclassifies certain other expenses to depreciation. 9MFY17 EBIT Margins have in fact contracted 10bps to 5.2%. Thus, for margin expansion of ~250bps within a year to occur, it would require a...