TVS Motor Company Ltd: Good Festive Season, Exports Under Pressure

TVS Motor Company ltd has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17). During the quarter, revenues grew by 20.6% YoY and net profits grew by 41.6%.

Performance summary

• For 2QFY17, net sales grew by 20.6% YoY on the back of strong volume growth. Over all volumes for the quarter grew at 20.2% YoY and realizations were up by 0.4%.
• Motorcycles and Mopeds grew by 30% and 35% YoY respectively. However, there was a slowdown in scooter and three wheelers. Scooters grew by 5%, while the industry grew by 27%. Three wheeler segment de-grew by 39% YoY, this was due to exports markets still facing pressure.
• The volume growth has been on the back of strong demand for the executive segment and mopeds. The recent re-launch of Victor has abode well for the company. Further, management indicated Apache and Jupiter (scooter) has got a good initial response.
• Operating profits for the quarters increased by 21.9% YoY with margins expanding by 7.7 bps to 7.4%. This was on the back of cost improvement measures taken by the company, the other expenses fell by 13.7% YoY.
• Net profits grew more than operating profits at 41.6% YoY with margins expanding by 74.7 bps to 5%. The robust increase in the net profit was due to high other income.
• During the first half of the financial year 2016-17 (1HFY17), top-line grew by 16.8% YoY and net profits grew by 43.2%.
• Further, the board has declared an interim dividend of Rs 1.25 per share.
  
  

  Consolidated Financial Performance Snapshot

  (Rs m)	2QFY16	2QFY17	Change	1HFY16	1HFY17	Change
  No. of two wheelers sold	678,718	815,562	20.2%	1,316,751	1,533,805	16.5%
  Net sales	30,894	37,263	20.6%	58,876.0	68,744.9	16.8%
  Expenditure	28,624.2	34,496.2	20.5%	54,878.5	63,974.2	16.6%
  Operating profit (EBDITA)	2,270	2,767	21.9%	3,998	4,771	19.3%
  EBDITA margin (%)	7.3%	7.4%	7.77	6.8%	6.9%	15.00
  Other income	194.60	392.00	101.4%	404.70	753.70	86.2%
  Depreciation	565.30	724.40	28.1%	1,069.10	1,383.90	29.4%
  Interest	115	94	-18.0%	245	192	-21.7%
  Profit before tax	1,785	2,340	31.1%	3,088	3,949	27.9%
  Exceptional item	-4	103		-32	304
  Tax	455.00	566.50	24.5%	757.70	962.20	27.0%
  Profit after tax / (loss)	1,326	1,877	41.6%	2,298	3,291	43.2%
  Net profit margin (%)	4.3%	5.0%	74.72	3.9%	4.8%
  No. of shares (m)					475.1
  Diluted earnings per share (Rs)*					11.0

  *trailing twelve-month earnings