Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
TVS: Impressive numbers butů - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 21, 2002

    TVS: Impressive numbers butů

    TVS Motor Company (formerly TVS Suzuki) continues to reap the benefit of the upturn in motorcycle sales and success of its new models. The company's profits have almost doubled in the second quarter ended 2QFY03. But the performance has also got to be viewed in the context of dismal results in the corresponding quarter in FY02 (net profit fell 49% in 2QFY02).

    (Rs m) 2QFY02 2QFY03 Change (%)
    Sales 4,283 7,051 64.6%
    Other Income 43 37 -13.3%
    Expenditure 3,997 6,434 61.0%
    Operating Profit (EBDIT) 286 616 115.4%
    Operating Profit Margin (%) 6.7% 8.7%  
    Interest 29 8 -73.8%
    Depreciation 137 152 11.2%
    Profit before Tax 163 494 202.8%
    Tax 60 185 208.3%
    Profit after Tax/(Loss) 103 309 199.5%
    Net profit margin (%) 2.4% 4.4%  
    No. of Shares (eoy) (m) 23.1 23.1  
    Earnings per share (Rs)* 17.8 53.4  
    P/E (x)   7.9  

    Turnover has increased by 65% in 2QFY03 to Rs 7 bn. This is primarily led by the success of the newly launched motorcycle, 'Victor'. Besides, TVS also reduced prices on its low-end model 'Max 100-R', which also could have aided this significant jump in turnover. Motorcycle sales for 2QFY03 is higher by 112% touching 182,000 units. Sale of ungeared scooters where the company had around 35% market share has also increased by 15% in 2QFY03. Though TVS is the dominant player in the moped segment with almost 75% market share, the segment has been losing out to scooterettes and motorcycle due to attractive price points from the latter ones.

    We expect value growth also to have complemented volume growth in 2QFY03. Our estimates suggest that 'Victor' accounted for around 16% of motorcycle volumes in FY02, which we expect will double in FY03. Due to this favorable product mix, realisations also have increased in 2QFY03 thus enabling TVS to boost turnover.

    Second quarter performance...
    (Nos) 2QFY02 2QFY03 Change (%)
    Motorcycles 85,849 182,000 112.0%
    Scooterettes 40,000 46,000 15.0%
    Mopeds 76,100 64,500 -15.2%
    Total 201,949 292,500 44.8%

    Benefits from higher capacity utilisation, favorable product mix and lower raw material costs have resulted in significant improvement in operating margins in 2QFY03. We expect the company to post 100 basis points rise in operating margins in FY03. Higher cash flow from operations has enabled TVS to retire debts at a faster rate that is reflected the form of lower interest outgo in 2QFY03. Despite a sharp spurt in tax outgo, net profits have increased significantly in the same period.

    The board of directors have declared an interim dividend of Rs 5 per share to those shareholders whose names appear in the register of members as on October 26, 2002. The stock currently trades at Rs 420 implying a P/E multiple of 8x annualised 1HFY03 earnings. While we expect TVS to post a 76% rise in net profits for FY03, in light of price war in the two-wheeler sector, there could be pressure on margins in the future. Since Hero Honda and Bajaj Auto have strong balance sheet, they are better placed to play the pricing game. The same may not hold true for TVS. TVS intends to spend almost Rs 5 bn as capital expenditure towards new product development and research facilities. If new models fail to succeed, profitability could be adversely affected. Keeping this mind, we expect the stock to remain weak in the near-term.



    Equitymaster requests your view! Post a comment on "TVS: Impressive numbers butů". Click here!


    More Views on News

    TVS Motor: Inventory Push Erodes Margins! (Quarterly Results Update - Detailed)

    May 22, 2017

    TVS Motor Company ltd has announced its financial results for the fourth quarter of the financial year 2016-17 (4QFY17).

    TVS Motor: Demonetisation Negates the Festive Growth (Quarterly Results Update - Detailed)

    Feb 17, 2017

    TVS Motor Company has announced its financial results for the third quarter of the financial year 2016-17 (3QFY17).

    TVS Motor Company Ltd: Good Festive Season, Exports Under Pressure (Quarterly Results Update - Detailed)

    Oct 28, 2016

    Good Festive Season, Exports Under Pressure!

    Tata Motors Ltd: Another Disappointing Quarter, Management fails to Perform! (Quarterly Results Update - Detailed)

    Aug 14, 2017

    Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.

    Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins! (Quarterly Results Update - Detailed)

    Aug 2, 2017

    GST realted cost impacts Margins, Management expects good year ahead.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 24, 2017 11:08 AM


    • 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


    Compare Company With Charts