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TVS Motor: Demonetisation Negates the Festive Growth - Views on News from Equitymaster
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  • Feb 17, 2017 - TVS Motor: Demonetisation Negates the Festive Growth

TVS Motor: Demonetisation Negates the Festive Growth
Feb 17, 2017

TVS Motor Company ltd has announced its financial results for the third quarter of the financial year 2016-17 (3QFY17). During the quarter, revenues grew by 3% YoY and net profits grew by 10.4%.

Performance summary
  • For 3QFY17, net sales grew by 3% YoY with volumes growing at 2.4% and a small hike in realizations of 0.6% (Rs 200-600 per model). The growth in the festive season was badly negated by the impact of the demonetisation.
  • Motorcycles were down 4.6% YoY, scooters were down 4.7% and three wheelers were down 38.5%. However, the Mopeds continued showing strong growth and grew by 27.2% The growth in the mopeds was largely due to low base and the replacement demand. Further, management indicated this kind of growth is not sustainable for mopeds.
  • Operating profits for the quarters increased by 3.9% YoY with margins expanding by 6.8 bps to 7.3%. This was on the back of cost improvement measures taken by the company, the other expenses were up by 1.6% YoY.
  • Net profits grew more than operating profits at 4.1% YoY with margins expanding by 29.6 bps to 4.5%. The increase in the net profit was due to high other income.

    Consolidated Financial Performance Snapshot
    (Rs m) 3QFY16 3QFY17 Change
    No. of two wheelers sold 702,000 719,000 2.4%
    Net sales 28,959 29,834 3.0%
    Expenditure 26,857 27,649 2.9%
    Operating profit (EBDITA) 2,102 2,185 3.9%
    EBDITA margin (%) 7.3% 7.3% 6.47
    Other income 248 348 40.3%
    Depreciation 621 720 16.0%
    Interest 98 115 17.2%
    Profit before tax 1,631 1,698 4.1%
    Tax 429 371 -13.5%
    Profit after tax / (loss) 1,202 1,327 10.4%
    Net profit margin (%) 4.2% 4.4% 29.59
    Diluted earnings per share (Rs)* 11.6
    Price to earnings ratio (x)* 36.8

    *trailing twelve-month earnings

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