TVS Motor - Weak domestic performance; 3W exports reviving - ElaraCapital

- Overall sales for TVS de-grew by 5.3% YoY to a total of ~165K units, driven by continued tepid sales in domestic market. Although we expected MoM pickup in Apr'13 on account of occurrence of Gudi Padwa and Navaratras during the month coupled with onset of marriage season

- Post the launch of Phoenix 125, bike sales have started to pick up (as indicated last month); during Apr'13 bike sales moved up by 9.8% MoM, as greater awareness was created about the product

- Among all segments, scooters continued to remain the worst hit by growing competition from HMSI and Hero, with sales falling by 17% YoY in Apr'13. We note that despite launch of disc brake enabled Wego, scooter run-rate continues to slip MoM. Most dealers attributed premium pricing (versus market leader) as a cause of low enquiry conversions, despite positive test ride feedback

- Post the sharp improvement in Moped run rate, it fell this month by 12% MoM and 7% YoY to ~62K units

- The key positive is the 3W sales which grew significantly by 62% YoY to 4,713 units. Its share to total sale stood at 2.9%, up from 1.7% last year and 2.4% in FY14

Our view: The growth in FY13 stands at minus 7.4%, which is likely to improve further in FY14E on the back of pick up in new Phoenix 125 and expected refreshes in scooter segments. Maintain accumulate on cheap valuation and likely recovery in volume growth by H1FY14E.

Source : Equity Bulls

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