MOSL: TVS MOTOR COMPANY (Neutral)- In-line results; lower other income restricts PAT growth
TVS Motor Company: In-line results; lower other income restricts PAT growth
(TVSL IN, Mkt Cap USD5.3b, CMP INR713, TP INR741, 4% Upside, Neutral)
- Favourable mix, price hikes aid realizations: Volumes grew 15% YoY (-12.9% QoQ) to 826.3k units. Realizations rose 4.4% QoQ (+7.4% YoY) to INR44.6k due to a favourable mix and price hikes. Net sales grew 23.5% YoY (-9.1% QoQ) to INR36.9b (in-line). EBITDA margin shrunk ~90bp QoQ (+50bp YoY) to 7.8% (our estimate: 7.6%), mainly due to higher marketing expenses, as well as export-related logistics and packaging costs. PAT growth was restricted to 16.3% YoY (-27.6% QoQ to INR1.5b; in-line) by lower other income.
- Earnings call highlights: a) Management maintained double-digit margin target by 4QFY18. b) Demand momentum to remain healthy in FY19; expects to gain further market share. c) Took price hike in Nov-17; further price increase may be taken to pass cost inflation. d) One new launch each in motorcycle and scooter segment in 4QFY18. e) Growth momentum in exports to continue. f) Received overwhelming response to Apache RR310; targets 10k sales in initial 12 months from launch. f) Loan book size of TVS Credit Services is INR59b as of end-3QFY18.
- Valuation view: We cut FY19/20E EPS by 2% to factor in lower other income. Valuations at 28.4x/21x FY19E/20E EPS are already reflecting large part of earnings drivers, leaving no margin of safety. Hence, we maintain our Neutral stance. Our TP is INR741 (~20x Mar-20E EPS + INR63/share for value in NBFC investment post 20% HoldCo discount).
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.