Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TVS MOTORS
PRICE: RS.62
RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.70
FY12E P/E: 11.9X
q TVS Motors 3QFY11 revenues and margins were as expected; but the
company reported higher than anticipated net profit figure on back of
drop in net interest cost and higher other income.
q Margins during the quarter contracted both YoY and QoQ on account of
rising input cost.
q Net interest cost for the quarter was down by 46.7% YoY and 32.5%
QoQ and other income was up from Rs 9mn in 3QFY10 and Rs26mn in
2QFY11 to Rs72mn during quarter under review.
q We are lowering our EBITDA margin estimates to factor in the rise in raw
material prices. We are also increasing our effective rate for FY11 and
FY12 to bring it in line with reported tax rate for 9MFY11.
q Our revised EPS estimates stands at Rs4.1 for FY11E (earlier Rs4.3) and
Rs5.2 for FY12E (earlier Rs5.8).
q We have lowered our PE multiple for larger players in light of increasing
commodity prices and rising interest rate scenario. We value the stock at
13.5x (10% discount to larger players) its FY12E EPS of Rs5.2 to arrive at a
price target of Rs70 (earlier Rs81 valued at 14x). We continue to rate the
stock as ACCUMULATE.
Revenues grows strongly, courtesy robust volumes
n TVS Motors 3QFY11 revenues grew by 51% from Rs10,895mn in 3QFY10 to
Rs16,467mn. Revenues were in line with our expectation of Rs16,144mn.
n Volumes during the same period increased by 41%. Domestic volumes were up
by 43% and export volumes grew by 24%.
n Improved product mix and price hikes translated into 6.8% improvement in the
net realization.
n However on sequential basis, revenues grew by a mere 1.9% aided by 1.6%
higher realization.
n Moving ahead into 4QFY11, we expect the revenues to remain almost flat on
sequential basis as we do not expect significant QoQ improvement in volumes.
n For FY12E, we have factored in 14% increase in volumes for the company as
against expected 33% volume growth in FY11E. Accordingly revenues are expected to jump by 18% in FY12E for the company.
Firm commodity prices cost dents margins
n TVSM's EBITDA margin during the quarter bore the brunt of rising input cost
despite benefits arising out of operating leverage and improved product mix.
n EBITDA margin for the quarter came down from 7.7% in 3QFY10 and 7.6% in
2QFY11 to 7.1 for the quarter but was in line with our expectations.
n TVS Motors reported EBITDA of Rs1,228mn as against our expectation of
Rs1,171mn.
n Raw material cost as a% of sales increase from 71.6% in 3QFY10 to 74.7%
during 3QFY11. Raw material cost per vehicle has increased 11.4% YoY whereas
the realization has improved by 6.8%.
n However the company has been able to protect its margins to a certain extent
operating leverage.
n Employee cost and other expenses per vehicle have declined by 1.8% (YoY) and
3.5% (YoY) respectively.
n As the volume growth is expected to decelerate from 33% in FY11 to 14% in
FY12, the company will have limited operating leverage going into FY12E. However the company has significant scope for improving its product mix.
n To factor in the impact of rise in raw material prices, we have lowered our
FY11E and FY12E EBITDA margin estimates from 7.6% to 7.3%.
Net profit boosted by lower net interest cost and higher other
income
n Net profit for the quarter improved by 137% YoY to Rs558mn.
n Net interest cost came down sharply from Rs180mn in 3QFY10 and Rs142mn in
2QFY11 to Rs96mn for the quarter under consideration.
n Further other income for the quarter jumped from Rs9mn in 3QFY10 and Rs26mn
in 2QFY11 to Rs72mn during 3QFY11.
n Accordingly the net profit for the quarter was ahead of our expectation of
Rs485mn.
Change in estimates and valuations
n We are factoring in 14% FY12 volume growth for the company which is broadly
in line with our industry growth rate expectation.
n However given the firm commodity price pressure we have lowered our FY11
and FY12 EBITDA margin estimates from 7.6% to 7.3%.
n Further more we are also increasing our effective tax rate for the company from
15% to 20% for FY11 and FY12 to bring it inline with 9MFY11 reported tax rate.
n Due to the above mentioned factors we are lowering our FY11E earnings estimate from Rs4.3 to Rs4.1 for FY11E and from Rs5.8 to Rs5.2 for FY12E.
n We have lowered our PE multiple for larger players in light of increasing commodity prices and rising interest rate scenario. For TVS motors we are lowering
our PE multiple from 14x to 13.5x (10% discount to larger players). Accordingly
our revised price target now stands at Rs70 (earlier Rs81) and we continue to
rate the stock as ACCMULATE.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
TVS MOTORS
PRICE: RS.62
RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.70
FY12E P/E: 11.9X
q TVS Motors 3QFY11 revenues and margins were as expected; but the
company reported higher than anticipated net profit figure on back of
drop in net interest cost and higher other income.
q Margins during the quarter contracted both YoY and QoQ on account of
rising input cost.
q Net interest cost for the quarter was down by 46.7% YoY and 32.5%
QoQ and other income was up from Rs 9mn in 3QFY10 and Rs26mn in
2QFY11 to Rs72mn during quarter under review.
q We are lowering our EBITDA margin estimates to factor in the rise in raw
material prices. We are also increasing our effective rate for FY11 and
FY12 to bring it in line with reported tax rate for 9MFY11.
q Our revised EPS estimates stands at Rs4.1 for FY11E (earlier Rs4.3) and
Rs5.2 for FY12E (earlier Rs5.8).
q We have lowered our PE multiple for larger players in light of increasing
commodity prices and rising interest rate scenario. We value the stock at
13.5x (10% discount to larger players) its FY12E EPS of Rs5.2 to arrive at a
price target of Rs70 (earlier Rs81 valued at 14x). We continue to rate the
stock as ACCUMULATE.
Revenues grows strongly, courtesy robust volumes
n TVS Motors 3QFY11 revenues grew by 51% from Rs10,895mn in 3QFY10 to
Rs16,467mn. Revenues were in line with our expectation of Rs16,144mn.
n Volumes during the same period increased by 41%. Domestic volumes were up
by 43% and export volumes grew by 24%.
n Improved product mix and price hikes translated into 6.8% improvement in the
net realization.
n However on sequential basis, revenues grew by a mere 1.9% aided by 1.6%
higher realization.
n Moving ahead into 4QFY11, we expect the revenues to remain almost flat on
sequential basis as we do not expect significant QoQ improvement in volumes.
n For FY12E, we have factored in 14% increase in volumes for the company as
against expected 33% volume growth in FY11E. Accordingly revenues are expected to jump by 18% in FY12E for the company.
Firm commodity prices cost dents margins
n TVSM's EBITDA margin during the quarter bore the brunt of rising input cost
despite benefits arising out of operating leverage and improved product mix.
n EBITDA margin for the quarter came down from 7.7% in 3QFY10 and 7.6% in
2QFY11 to 7.1 for the quarter but was in line with our expectations.
n TVS Motors reported EBITDA of Rs1,228mn as against our expectation of
Rs1,171mn.
n Raw material cost as a% of sales increase from 71.6% in 3QFY10 to 74.7%
during 3QFY11. Raw material cost per vehicle has increased 11.4% YoY whereas
the realization has improved by 6.8%.
n However the company has been able to protect its margins to a certain extent
operating leverage.
n Employee cost and other expenses per vehicle have declined by 1.8% (YoY) and
3.5% (YoY) respectively.
n As the volume growth is expected to decelerate from 33% in FY11 to 14% in
FY12, the company will have limited operating leverage going into FY12E. However the company has significant scope for improving its product mix.
n To factor in the impact of rise in raw material prices, we have lowered our
FY11E and FY12E EBITDA margin estimates from 7.6% to 7.3%.
Net profit boosted by lower net interest cost and higher other
income
n Net profit for the quarter improved by 137% YoY to Rs558mn.
n Net interest cost came down sharply from Rs180mn in 3QFY10 and Rs142mn in
2QFY11 to Rs96mn for the quarter under consideration.
n Further other income for the quarter jumped from Rs9mn in 3QFY10 and Rs26mn
in 2QFY11 to Rs72mn during 3QFY11.
n Accordingly the net profit for the quarter was ahead of our expectation of
Rs485mn.
Change in estimates and valuations
n We are factoring in 14% FY12 volume growth for the company which is broadly
in line with our industry growth rate expectation.
n However given the firm commodity price pressure we have lowered our FY11
and FY12 EBITDA margin estimates from 7.6% to 7.3%.
n Further more we are also increasing our effective tax rate for the company from
15% to 20% for FY11 and FY12 to bring it inline with 9MFY11 reported tax rate.
n Due to the above mentioned factors we are lowering our FY11E earnings estimate from Rs4.3 to Rs4.1 for FY11E and from Rs5.8 to Rs5.2 for FY12E.
n We have lowered our PE multiple for larger players in light of increasing commodity prices and rising interest rate scenario. For TVS motors we are lowering
our PE multiple from 14x to 13.5x (10% discount to larger players). Accordingly
our revised price target now stands at Rs70 (earlier Rs81) and we continue to
rate the stock as ACCMULATE.
No comments:
Post a Comment