Q4FY19 results
Key positives: Strong realization growth, lower employee costs
Key negatives: Lower gross margins
Change in estimates: We cut our estimates for FY20/21 by 10%/16% respectively on weak volume growth/margins
Valuations & view
The two wheeler market will likely continue to be stressed as rising cost pressures (ABS, BSVI) coincide with increasing competitive intensity and a weakness in demand. TVS Motors with its wafer thin margins could be most impacted in such a scenario. Valuations at 21XFY21 remain extremely high. We maintain an Underperformer rating with a target price of Rs 440 (18xFY21E EPS + Rs50 for the BMW joint venture).
TVS Motor Company Limited. TVS Motor Company Limited is engaged in the manufacturing of motorcycles, scooters, mopeds, three wheelers, parts and accessories. The Company's motorcycles include Apache Series RTR, Phoenix 125, Victor, StaR City+, Sport and Max4R. Its scooters include Jupiter, Wego, Scooty Zest 110, Scooty Streak and Scooty Pep +. Its mopeds include XL 100, XL Super and XL Super Heavy Duty. Its three wheelers include TVS King. It has approximately four manufacturing plants, approximately three located in India (Hosur, Tamil Nadu; Mysore, Karnataka, and Nalagarh, Himachal Pradesh) and one in Indonesia (Karawang). The Company's TVSM Service(Beta) mobile application features include service schedules, service booking, and news and updates, among others. Its subsidiaries include PT. TVS Motor Company Indonesia, TVS Motor Company (Europe) B.V., TVS Motor (Singapore) Pte. Limited, Sundaram Business Development Consulting (Shanghai) Company Limited and Sundaram Holding USA Inc., among others.
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