TVS Motors - NOT RATED - Management meeting takeaways - Ambit

We recently met the management of TVS Motors to understand the company's perspectives on: its ability to regain/gain market share particularly in the domestic motorcycles space, current demand trends and the company's investments outside of the standalone 2W/3W business. Whilst the management indicated that near-term demand in the 2W industry would remain weak, it remains positive on the long-term volume potential of the 2W industry (10-12% long-term volume CAGR).

Also, the management expects to gain double-digit market share in domestic motorcycles (from the current 5.5%) and double-digit EBITDA margin (vs 6.3% now) in the next 2-3 years. Whilst we need to verify the management's claims on the company's market share and margin prospects, we do believe that TVS Motors has an opportunity to gain market share in the domestic motorcycles space. A meaningful association with BMW can also help in this regard.

TVS Motors' stock price trades at a nearly 50% discount to the valuation of its larger peers (Hero MotoCorp and Bajaj Auto).

Source : Equity Bulls

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