TVS Motor Company - 4QFY2014 results - Angel Broking

Views of Mr. Yaresh Kothari (Research Analyst- Automobile, Angel Broking) on TVS Motor Company 4QFY2014 results:

"TVS Motor Company (TVSL) reported strong results for 4QFY2014, which were marginally ahead of our estimates, led by continued momentum on the exports front (volumes up 32.8% yoy), strong growth in scooter sales backed by Jupiter and better product-mix.

Top-line grew strongly by 21.4% yoy (4.8% qoq) to Rs. 2,156cr, slightly lower than our estimates of Rs. 2,200cr. The marginal miss on the top-line was primarily due to lower-than-expected growth in net average realization. Overall top-line performance was aided by 10.1% and 9.9% yoy growth in volumes and net average realization respectively. The volume performance benefitted from the launch of the new Jupiter which led to a 38% yoy growth in scooter volumes and continued traction on the exports front where the volumes surged 32.8% yoy during the quarter. Net average realization growth was on account of the superior product-mix and higher exports realization led by INR depreciation. Net average realization on a sequential basis declined 3.5% mainly due to the reduction in prices following reduction in excise duty during the Interim Budget. On the operating front, EBITDA margins expanded 115bp yoy (43bp qoq) to 6.4%, broadly in-line with our estimates of 6.3%, driven by superior product-mix, operating leverage benefits and cost reduction initiatives. Driven by a strong operating performance adjusted net profit grew strongly by 40.8% yoy (19.4% qoq) to Rs. 82cr, marginally higher than our expectations of Rs. 79cr. During the quarter, the company made a provision of Rs. 33cr towards its wholly owned subsidiary, TVS Motor Company (Europe) B.V. Accounting for the provisions, reported net profit stood at Rs. 52cr.

We expect TVSL's operating environment to improve given that its new scooter launch, Jupiter has been accepted well by the markets. The company further intends to launch one more scooter (upgraded Scooty) to consolidate its position in the segment. Additionally, the volumes would also get a boost from the new launches in the motorcycle segment, strong focus on exports and entry into Nigerian market. At the CMP, the stock is trading at 11.5x FY2016E earnings. We maintain our Accumulate rating on the stock with a target price of Rs. 104."

TVS Motor Company 4QFY2014 Result Review (CMP: Rs. 92/ TP: Rs. 104/ Recommendation: Accumulate)

Shares of TVS MOTOR COMPANY LTD. was last trading in BSE at Rs.101.05 as compared to the previous close of Rs. 95.25. The total number of shares traded during the day was 1321963 in over 15205 trades.

The stock hit an intraday high of Rs. 102.5 and intraday low of 95.9. The net turnover during the day was Rs. 131312874.

Source : Equity Bulls

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