Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TVS MOTOR -Working Capital Efficiency Neutralises Input Cost
TVS Motor (TVSL) performance for Q3FY11 fell short of our
expectation with reported profit 7% lower than our expectation
of Rs598mn. Increase in raw material cost led to a sequential
decline in margins to 6.1%. However, lower interest cost and
higher other income helped PAT more than double to
Rs558mn.
Volume growth across segments: Overall volumes jumped 39.8%
to 524k units with growth across all segments. Domestic motorcycle
volumes were up 44% as against an industry growth of 15.6% gaining
170bps marketshare. Success of the Wego led to a 64% surge in
scooter volumes. Inspite of the impressive growth in the segment
marketshare gain was restricted to 100bps as the segment growth
was 56%. Moped volumes were up 27%. Two-wheeler exports were
up 17.6%. Three-wheeler sales crossed the 10k mark for the quarter.
Margins under pressure: A richer product mix due to higher
contribution of motorcycles and three wheelers aided a 2% QoQ
growth in realisations to Rs31.4k/unit. However, raw material cost
per vehicle increased by 3% denting margins. Operating margins
contracted 50bps sequentially to 6.1% and were lower than our
estimate of 7%.
Lower interest costs boost profits: Reduction in working capital
resulted in a 46.7% YoY decline in interest cost to Rs96mn.
Consequently reported profits surged 137% to Rs558mn.
Outlook: We estimate TVSL to achieve volumes of 2mn and
2.3mn units during FY11 and FY12 respectively. We expect
profitability to be maintained in the range of 7%. Our earnings
estimate for FY11 and FY12 are unchanged at Rs4.5 and Rs5.9
respectively.
VALUATIONS AND RECOMMENDATION
The stock is currently trading at 10.6x FY12E standalone earnings.
We maintain a ‘BUY’ rating on the stock with a target price of Rs94
discounting FY12E earnings 16x.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
TVS MOTOR -Working Capital Efficiency Neutralises Input Cost
TVS Motor (TVSL) performance for Q3FY11 fell short of our
expectation with reported profit 7% lower than our expectation
of Rs598mn. Increase in raw material cost led to a sequential
decline in margins to 6.1%. However, lower interest cost and
higher other income helped PAT more than double to
Rs558mn.
Volume growth across segments: Overall volumes jumped 39.8%
to 524k units with growth across all segments. Domestic motorcycle
volumes were up 44% as against an industry growth of 15.6% gaining
170bps marketshare. Success of the Wego led to a 64% surge in
scooter volumes. Inspite of the impressive growth in the segment
marketshare gain was restricted to 100bps as the segment growth
was 56%. Moped volumes were up 27%. Two-wheeler exports were
up 17.6%. Three-wheeler sales crossed the 10k mark for the quarter.
Margins under pressure: A richer product mix due to higher
contribution of motorcycles and three wheelers aided a 2% QoQ
growth in realisations to Rs31.4k/unit. However, raw material cost
per vehicle increased by 3% denting margins. Operating margins
contracted 50bps sequentially to 6.1% and were lower than our
estimate of 7%.
Lower interest costs boost profits: Reduction in working capital
resulted in a 46.7% YoY decline in interest cost to Rs96mn.
Consequently reported profits surged 137% to Rs558mn.
Outlook: We estimate TVSL to achieve volumes of 2mn and
2.3mn units during FY11 and FY12 respectively. We expect
profitability to be maintained in the range of 7%. Our earnings
estimate for FY11 and FY12 are unchanged at Rs4.5 and Rs5.9
respectively.
VALUATIONS AND RECOMMENDATION
The stock is currently trading at 10.6x FY12E standalone earnings.
We maintain a ‘BUY’ rating on the stock with a target price of Rs94
discounting FY12E earnings 16x.
No comments:
Post a Comment