TVS Suzuki: Tough times continue - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

TVS Suzuki: Tough times continue

May 4, 2001

TVS Suzuki, a leading manufacturer of two wheelers, continues to face tough times. For April 2001, the company's total sales volume at 51,118 fell by 24% over March 2001 volumes of 67,016 units, mainly due to a sharp fall in moped volumes. The company has projected a 7.6% growth in overall volumes for FY02 to 929,500 units as compared to 863,559 units in FY01. Though this is in line with market expectations, it is likely to be lower than its peers. The main growth is likely to come from its motorcycle and scooter segments as the moped segment continues to shrink.

TVS Suzuki has been a late entrant in the four stroke motorcycle segment and as a result has lost out in this segment as compared to its peers, Hero Honda and Bajaj Auto in FY01. Both these companies have seen an improvement in their market share in FY01, however TVS's market share in the motorcycle segment fell in FY01.

The company plans to come out with new models in the four stroke 100 cc motorcycle segment in the current year so as to improve its share in this fast growing segment. This segment is currently Hero Honda's forte with its largest selling bike the Splendor. Though TVS's Fiero (175 cc bike) in the premium end is doing well, the 100 cc segment accounts for 80% of total motorcycle demand. Hence it is important to have a presence here. However, the company is entering the 100 cc segment when the motorcycle segment is facing a lower pace of growth.

Another tough area that TVS Suzuki needs to tackle is its falling moped sales. Mopeds accounted for 46% of total sales in FY00 and 42% in FY01. In FY01, the company's moped sales fell by 4% YoY to 366,479 units. The company has been seeing a decline in its moped volumes due to a shift in consumer preference from this segment towards motorcycles. Also the recent reduction in excise duty from 24% to 16% for motorcycles and scooters is leading this switch in demand.

(Units sold) FY00 FY01 Change Mar-01 Apr-01 Change
Motorcycles 326,357 354,505 9% 32,425 27,512 -15%
Mopeds 381,850 366,479 -4% 25,292 15,250 -40%
Scooters/Scooterettes 127,550 142,575 12% 9,299 8,356 -10%
Total 835,757 863,559 3% 67,016 51,118 -24%

We expect the company's margins to remain under pressure in the current financial year as it will have to spend substantial amounts for marketing and advertising. Also its product development expenses are likely to rise.

The overall two wheeler segment is showing signs of a slowdown in the current year due to low agricultural growth since the past two years. Even though the import duty on CBU's has been hiked from 35% to 60%, the threat of Chinese imports continues to weigh down on the industry.

Even though prospects for the company do not look as bright, its valuations are at very low levels. On the current price of Rs 90, TVS Suzuki is trading at 3.4xFY01 EPS of Rs 26.5.


Equitymaster requests your view! Post a comment on "TVS Suzuki: Tough times continue". Click here!

  

More Views on News

TVS MOTORS Announces Quarterly Results (4QFY20); Net Profit Down 44.8% (Quarterly Result Update)

Jun 1, 2020 | Updated on Jun 1, 2020

For the quarter ended March 2020, TVS MOTORS has posted a net profit of Rs 739 m (down 44.8% YoY). Sales on the other hand came in at Rs 35 bn (down 20.6% YoY). Read on for a complete analysis of TVS MOTORS's quarterly results.

TVS MOTORS Announces Quarterly Results (3QFY20); Net Profit Down 32.1% (Quarterly Result Update)

Feb 5, 2020 | Updated on Feb 5, 2020

For the quarter ended December 2019, TVS MOTORS has posted a net profit of Rs 1 bn (down 32.1% YoY). Sales on the other hand came in at Rs 41 bn (down 11.5% YoY). Read on for a complete analysis of TVS MOTORS's quarterly results.

TVS MOTORS 2018-19 Annual Report Analysis (Annual Result Update)

Jun 27, 2019 | Updated on Jun 27, 2019

Here's an analysis of the annual report of TVS MOTORS for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of TVS MOTORS. Also includes updates on the valuation of TVS MOTORS.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

How Much Money Do You Need to Be a Professional Trader? (Fast Profits Daily)

Sep 17, 2020

In this video I'll answer a question I get asked often: How much capital do I really need to trade the markets for a living? Let's find out...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

TVS MOTORS SHARE PRICE


Sep 25, 2020 02:56 PM

TRACK TVS MOTORS

  • Track your investment in TVS MOTORS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

TVS MOTORS 8-QTR ANALYSIS

COMPARE TVS MOTORS WITH

MARKET STATS