TVS Srichakra - Q1FY2014 Result Review - Angel Broking

For 1QFY2014, TVS Srichakra (TVSSL) registered a topline growth of 5.6% yoy to Rs. 381cr, in line with our estimate of Rs. 383cr. The operating margin expanded marginally by 71bp and came in at 6.0%, against our estimate of 5.4%. The company reported a higher than expected other income of Rs. 6cr in the quarter. The tax expense came in at 32.0% of PBT at Rs. 3cr. Consequently, the company reported a profit of Rs. 7cr in the quarter, ahead of our estimate of Rs. 3cr.

However, we expect that the company's sales and operating margin will improve by FY2015E with the expected recovery in the demand for two wheelers and slight softening in the rubber price. At the CMP, the stock is trading at a PE of 4.1x on FY2015E earnings. On account of the low valuation, we maintain our Buy recommendation on the stock with a target price of Rs. 230 based on a target PE of 6.0x for FY2015E.

Source : Equity Bulls

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