TVS Motor - Q4FY13 Result Review - Angel Broking

For 4QFY2013, TVS Motor Company (TVSL) reported weak operating performance led by continued EBITDA margin pressures which declined 60bp on a sequential basis. However, the adjusted bottom-line at Rs. 58cr (adjusted for exceptional charge) was ahead of our estimates led by 53% decline in interest cost, which was the only positive surprise in the quarterly results. The interest cost declined as the company repaid loans worth Rs. 170cr during the quarter. TVSL recorded an exceptional charge of Rs. 92cr in 4QFY2013 towards provisioning for diminution in the value of its European subsidiary, TVS Motor Company (Europe). As a result of this, the company reported a bottom-line loss of Rs. 33cr.

The top-line for the quarter, declined by 2.8% qoq to Rs. 1,748cr due to a 1.8% qoq decline in volumes led by the slowdown in the two-wheeler industry and increasing competition. The net average realization too registered a decline of 1.3% qoq on account of adverse product-mix. On the operating front, EBITDA margin posted a decline of ~60bp qoq led by increase in other expenditure which could be probably on account of higher marketing spends and increase in power and distribution expenses. At Rs. 38, TVSL is trading at 6.6x FY2015E earnings.

Currently, we have a Neutral rating on the stock. We shall revise our estimates post our interaction with the management.

Source : Equity Bulls

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