TVS Motor Company - Marginally below expectations - Ambit

TVS Motor Company's (TVSM) 1QFY14 revenues and margins were marginally below our expectations owing to lower volumes and higher employee costs. Going forward, we expect the company to regain its market share (albeit marginally) through new/recent launches in the 'executive segment' (60% of the motorcycle market) and more frequent launches/refreshes (enabled by a now well-established product platform straddling across all motorcycle segments).

Furthermore, we expect the improving product mix (higher sales of motorcycles as compared to mopeds and strong 3W sales in the export market) and INR depreciation (net export exposure of 8-10% of revenues) to help margins going forward. We also expect the BMW tie-up to present significant long-term opportunities to TVSM. Whilst we expect equity infusion of Rs500mn into the Indonesian subsidiary in FY14 (given the continuing weak volumes), the company's decision to divest majority stake in the unrelated venture, TVS Energy, is a positive step.

We retain our BUY stance.

Source : Equity Bulls

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