TVS sales volume up 24% in 1HFY00 - Views on News from Equitymaster

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TVS sales volume up 24% in 1HFY00

Oct 5, 1999

Two wheeler major, TVS Suzuki, has posted 24% rise in sales volume in 1HFY2000. This was reported by a leading financial daily. TVS Suzuki, incorporated in 1982, is a joint venture between Sundaram Clayton (TVS group) and Suzuki Motor Corporation. Along with Bajaj Auto, it is the only other company in the two-wheeler market with a presence in all three segments - scooters (1% market share in July 1999), mopeds (54% market share) and motorcycles (20% market share).

TVS sold 413,244 vehicles over the period April-September 1999, up 24% over the corresponding period last year. The strong volume growth is attributed to persistent demand in the motorcycle segment. Its motorcycle sales in 1HFY00 were up 31% to 161,541 units, while moped sales at 190,003 were up 11%, over the corresponding period last year.

TVS' volume growth in motorcycles (up 31%) and mopeds (up 11%) outperformed both these segments, which posted volume growth of 24.7% and 0.7% respectively. In view of an impressive sales volume growth, analysts have forecasted 15-20% net profit growth for the company in 1HFY00.

However, poor scooter sales are a matter of concern for the company. In July 1999, it had a mere 1% share of the scooter market. So far, none of its brands have made a dent in the leadership status of Bajaj Auto or even LML for that matter. In a strategic move. the company has repositioned the 'Spectra' (its flagship scooter brand), but it is too early to comment on the success of this strategy.

There could be some pressure on the company's margins in 2HFY00, as it will have to incur additional costs to comply with the stringent two wheeler emission norms.

Market view:
In view of the company's impressive sales volume growth in motorcycles and mopeds, analysts have flagged the stock as a 'BUY'.

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