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TVS: 'Victor' led numbers - Views on News from Equitymaster
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  • Jan 28, 2002

    TVS: 'Victor' led numbers

    TVS Motor Company, formerly TVS Suzuki, has posted a 7% rise in sales for 3QFY02. This was led by a sharp rise in sales volumes 'TVS Victor', the newly launched indigeneously-developed motorcycle. While scooter sales have risen by 5% in 3QFY02, moped sales continues to remain sluggish.

    (Rs m) 3QFY01 3QFY02 Change
    Net sales 4,864 5,205 7.0%
    Other Income 29 23 -20.3%
    Expenditure 4,483 4,890 9.1%
    Operating Profit (EBDIT) 381 315 -17.3%
    Operating Profit Margin (%) 7.8% 6.1%  
    Interest 62 28 -54.2%
    Depreciation 127 141 11.5%
    Profit before Tax 222 169 -23.8%
    Tax 60 62 3.2%
    Profit after Tax/(Loss) 162 107 -33.9%
    Net profit margin (%) 3.3% 2.1%  
    No. of Shares (m) 23.1 23.1  
    Diluted Earnings per share* 28.0 18.5  
    P/E Ratio   13.6  

    The total sale of two wheelers in the third quarter was 2,34,055 units, an increase of 7% over last year's sale of 2,19,089 units. The most encouraging feature of sales in the current quarter is the major increase from motorcycle, which grew by 36% over the corresponding period last year and 51% over the previous quarter. Scooter sales aggregated at 38,053 units, showing a rise of 5% over the corresponding period last year (36,147 units).

    Margins have declined by around 180 basis points and this could be attributed towards higher advertisement expenses for 'Victor'. The company is expected to report a 7%-8% fall in volume sales for FY02. Though TVS seems to have gained market share in the third quarter of the current fiscal, for FY02, its market share is expected to be in the range of 14% as against 16% in FY01. While TVS is expected to consolidate its market share in the moped segment, Bajaj Auto has made some inroads into TVS's share in the scooter segment with the launch of 'Saffire'. TVS is expected to report a 24% drop in net profit for FY02.

    The stock currently trades at Rs 252 implying a P/E multiple of 13.6x annualised nine months earnings.



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