TVS Motors: Oct ’10 volume: Record sales reported :: Standard Chartered

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TVS Motors: Oct ’10 volume: Record sales reported: Highest
across all 2W verticals



TVS Motor reported highest-ever monthly sales across all two
wheeler verticals. Volume grew a strong 48% yoy, driven by
strong growth of 46.4% yoy in the 2W segment . Three
wheeler volume was also good (278% increase), and
company plans to increase this segment in its product mix,
going forward. Export volume grew at a strong 44.8% yoy.
Despite healthy YTD growth and expected residual growth of
13%, we believe current valuations are rich compared to other
2W companies. Reiterate Underperform with a target price of
Rs73.




Highest ever monthly sales –TVS Motor’s volume grew a
strong 48% yoy and 3.9% mom to 195,271 units, driven by
growth in 2W segment at 46.4% yoy and 3.8% mom. The
YTD sales for the company grew 35.3% yoy to 1.184mn
units. We expect residual growth of 13% in volume for
FY11E.
2W reports record sales across all verticals. All three
segments in two wheelers reported the highest ever
numbers. Scooters, the fastest growing segment, reported
58% yoy and 3.7% mom growth at 44,659 units.
Motorcycles continued to grow strongly by 49.2% yoy and
3.5% mom to 84,233 units. Moped sales, sustaining a good
trend, grew strongly by 36% yoy and 4.3% mom to 62,930
units.
Three-wheeler sustains high volume growth. Threewheeler
volume increased 278.2% yoy and 7% mom to
3,449 units. The company is increasing 3W sales in its
product mix, but it remains insignificant compared to other
products (<2%)
Exports recovery continues. TVS exports marked the
eleventh consecutive month of yoy volume growth;
increased 44.8% yoy but declined 6.8% mom to 18,051
units.
Valuation: Reiterate Underperform - YTD volume has
shown healthy growth of 35.3% yoy with an expected
residual growth of 13%. Latest offerings Jive and Wego are
doing well. TVS is also re-introducing the twin-spark Flame
to capture the festival season demand. However, we
believe current valuations are rich compared to other 2W
companies. Maintain Underperform