TVS Motor (TVSL IN) - Strong operational performance - CSEC Research

- In 2QFY18, TVS Motor revenue grew by 18.3% YoY to INR 40.5bn led by volumes growth of 17% YoY and 2% YoY increase in realization.

- EBITDA grew by 27% YoY to INR 3.5bn. EBITDA margin increased by 50 bps YoY to 8.6% led by lower RM/sales cost & better operating leverage. Management indicated to achieve double-digit margin in 4QFY18E and expects to maintain double digit margin FY18E onwards. TVS took price hike of INR 250 in Sept'17. PAT grew by 20% YoY to INR 2.1bn.

- During the quarter, the overall two-wheeler sales of the company including exports grew by 16.1% YoY to 0.92mn units. Motorcycles sales grew by 9.9% YoY to 0.36mn units. Scooter sales increased by 43.2% YoY to 0.33mn units in 2QFY18. The company exported 0.14mn units of two and three wheelers, registering a growth of 32.1% YoY. Three wheelers sales registered a growth of 23.8% YoY to 25,248 units.

Valuation: Currently the stock is trading at 42.8/27.6X FY18E/19E EPS, respectively. We value the stock at P/E of 29X on FY19EPS with a target of INR 729 and maintain an OUTPERFORMER rating on the stock. Risks: Rise in commodity prices and a slowdown in scooter sales growth.

Shares of TVS MOTOR COMPANY LTD. was last trading in BSE at Rs.693 as compared to the previous close of Rs. 708.2. The total number of shares traded during the day was 92870 in over 1921 trades.

The stock hit an intraday high of Rs. 710.15 and intraday low of 688.25. The net turnover during the day was Rs. 64606831.

Source : Equity Bulls

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