TVS Motor Company Ltd. share price target

Revival in growth expected in second half. TVS Motors (TVS) is the third largest two-wheeler manufacturer in India with a domestic market share of 14.3% in FY21. Q2FY22 revenue growth came at 22% YoY (largely in-line with our...

TVS Q2FY22 profit increased by 41.5% YoY to Rs2.8bn which is in line with our estimates. The Company reported double digit EBITDA margins twice in last three quarters which is quite commendable. Management commentary about growth prospects in the domestic 2W market was encouraging. However aggressive plans in the EV segment with new launches and new initiatives in export markets were impressive. To factor in current slackness in the business environment, we have reduced our volume and PAT estimates by 0.9% and 6.8% for FY23. We believe, TVS is likely to grow ahead of industry in its domestic and its international business based on the strength and popularity...

Inline operating performance: Volumes for the quarter grew by 5.6% YoY to 916k units affected by challenging demand environment. However, average realizations grew 15% YoY to Rs 61.3k driven by premiumisation and price hikes (1.1% in 2QFY22). Revenue grew 22% YoY to Rs 56.19bn (vs PLe of Rs 55.82bn), highest ever reported revenue. EBITDA margin came in at 10% (+70bps YoY, vs PLe of 9.1%); this was driven by better product mix and cost...

Revival in growth expected in second half. TVS Motors (TVS) is the third largest two-wheeler manufacturer in India with a domestic market share of 14.3% in FY21. Q1FY22 revenue came lower at 26% QoQ due to pandemic related disruption, leading to supply constraints, lower utilization and thus negative operating leverage. Despite adverse commodity price, Strong cost control initiatives...

Commodity cost impact and margins: The commodity cost impact in 1QFY22 was offset by a favorable product mix, cost-saving initiatives, and product price hikes. During the quarter & subsequently beginning Q2'FY22 the company undertook a price hike of 1.1% in Apr'21 and 2.4% in Jul'21. The management is confident of normalizing EBITDA margins, and recovery in volumes...

Net sales grew 175% YoY (-26% QoQ) to INR39.3b (v/s est. INR37.9b) as realizations grew 11.5% YoY (+4% QoQ) to INR59.8k (v/s est. INR57.7k). Gross margin contraction was restricted to ~40bp QoQ (+20bp YoY) to 24.3% (v/s est. 23.5%) as commodity cost inflation was diluted by price hikes (110bps), a favorable mix, and cost management. The EBITDA margin declined 310bp QoQ to 7% (v/s est. 7.1%), impacted by higher staff cost and operating deleverage. Higher interest/depreciation restricted adj. PAT to INR757m (v/s est...

We continue to maintain our HOLD rating with a revised target price of Rs 570 (from Rs 600 earlier) valuing the company at 22x FY23EPS.

Demand outlook remains strong both in Domestic and Export Markets. TVSL's 1Q margins were impacted by low scale of operations and negative operating leverage at 7% (PLe 8.3%). However better product mix in terms of higher share of exports, increasing share of premium products and price hikes supported its gross margins on QoQ basis. Management stands seriously committed to EVs and has earmarked Rs10bn for investment in the EV focused entity. We remain upbeat on export and domestic demand...

Q1 revenue met our estimate but EBITDA margin fell short at 7% and adj. PAT declined 70% QoQ to Rs 833mn

TVS Motors (TVS) is the third largest two-wheeler manufacturer in India with a domestic market share of 14.3% in FY21. Q4FY21 revenue came at 53%YoY in line with our estimate. This was largely on account of lower base, strong export volume growth, premium product mix and price hike. Company reported highest operating growth of 119%YoY for the quarter. Strong cost control initiatives and superior product mix helped the margin to reach at 10.1% against 7% during Q4FY20....