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TVS Suzuki 1QFY01: net down 3% - Views on News from Equitymaster
 
 
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  • Aug 3, 2000

    TVS Suzuki 1QFY01: net down 3%

    TVS Suzuki Ltd has reported a net profit of Rs 206 m for the 1QFY01, which is a decline of 3% YoY. The company's sales grew by 24% to Rs 4,526 m for the 1QFY01 on the back of robust volumes and realisations. However operating margins declined by 260 basis points to 9.1% in the 1QFY01, due to higher operating expenses. These higher expenses can be attributed to increase in raw material and marketing expenses due to new product launches.

    TVS Suzuki is a joint venture between Sundaram Clayton (TVS group) and Suzuki Motors, Japan. The company has a presence in all the two wheeler segments. The company's dynamic management, product launches, technical superiority and a well established network are its strengths. It reported a sales of Rs 16.2 bn for FY2000.

    (Rs m) 1QFY00 1QFY01 Change
    Sales 3,650 4,526 24.0%
    Other Income 14 52 279.4%
    Expenditure 3,222 4,114 27.7%
    Operating Profit (EBDIT) 429 411 -4.2%
    Operating Profit Margin (%) 11.7% 9.1%  
    Interest 69 58 -15.8%
    Depreciation 91 122 35.2%
    Profit before Tax 283 282 -0.3%
    Other Adjustments - -  
    Tax 71 76 7.5%
    Profit after Tax/(Loss) 212 206 -2.9%
    Net profit margin (%) 5.8% 4.6%  
    No. of Shares (eoy) (m) 23.1 23.1  
    Diluted number of shares 23.1 23.1  
    Diluted Earnings per share* 36.7 35.7  
    *(annualised)      

    The company's net margins fell to 4.6% in the 1QFY01 from 5.8% in the 1QFY00. This is due to a rise in depreciation costs by 35% YoY due to higher capital expenditure during the year.

    During FY2000, the company launched the 4 stroke Suzuki Fiero in the motorcycle segment and the XL Super Heavy Duty in the moped segment. These launches have resulted in higher raw material and marketing costs for the company and have put a pressure on its operating margins in the current year. During FY2001 the company has launched the TVS Sport, a moped aimed at the urban consumer.

    TVS Suzuki volumes up 13% YoY in the 1QFY01
    (no. of units sold) 1QFY00 1QFY01 % change
    Motorcycles 75,796 89,074 17.5%
    Moped 88,727 95,819 8.0%
    Scooter 28,830 33,944 17.7%
    Total 193,353 218,837 13.2%

    The company's motorcycle and scooter sales for the 1QFY01 have done well. In the motorcycle segment the 4 stroke 150 cc bike the 'SUZUKI FIERO', volumes crossed 4,000 in June'2000. This bike is currently available in Maharashtra, Karnataka, Kerala, Rajasthan and Delhi. The company is stepping up its production of this bike as it plans to launch this in other states as well.

    On the current price of Rs 233, TVS Suzuki is trading at 6.1x FY2000, EPS of Rs 37.9.

     

     

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