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TVS Motor
1Q FY12: Improved realisation, lower other expense boost earnings
TVS’ 1Q earnings were above our estimate, led by
better-than-expected revenue growth.
Revenue up 25% yoy – above our estimate given
improved realisation led by a better product mix and
price hikes.
Margin stable despite higher input costs due to lower
other expenses.
Given heightened competition and lack of new launches,
we believe TVS is the most vulnerable 2W player.
Maintain IN-LINE.
Revenue above estimate led by improved realisation–
Revenue rose 25% yoy to Rs17.5bn (we estimated Rs17bn)
led by 16% yoy growth in volume and 8% yoy growth in
average realisation. Average realisation was above our
estimate given price hikes and an improved product mix
(higher 3W sales).
Margin stable qoq despite rising cost pressure – Raw
material cost pressure resulted in RM /sales increasing by
190bps yoy to 74.7%. However, despite the sharp increase
in input costs, TVS was able to maintain its operating
margin on account of lower other expenses – at 12.9% of
net sales against 14.5% in 1Q FY11 and 14.8% in 4Q FY11.
As a result, EBITDA margin remained stable yoy at 7.2%.
Earnings higher than estimate led by higher revenue
growth – Driven by strong revenue growth, EBITDA grew
21% yoy to Rs1.25bn. Interest burden increased to
Rs116m. Led by strong revenue growth and stable margins,
earnings grew 46% yoy to Rs588m.
Valuation – Amidst rising competitive intensity and lack of
new launches for the major part of FY12E, we believe TVS
appears to be the most vulnerable amongst the top three
2W players in India. While scooters and mopeds are driving
volume growth, TVS has been unable to ramp up its
motorcycle volumes. Also, although 3W exports are doing
well currently, TVS has failed to gain any meaningful
presence in the domestic market. At 9.4x FY12E earnings
and 4.7x EV/EBITDA, the stock appears fairly valued.
Maintain IN-LINE
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TVS Motor
1Q FY12: Improved realisation, lower other expense boost earnings
TVS’ 1Q earnings were above our estimate, led by
better-than-expected revenue growth.
Revenue up 25% yoy – above our estimate given
improved realisation led by a better product mix and
price hikes.
Margin stable despite higher input costs due to lower
other expenses.
Given heightened competition and lack of new launches,
we believe TVS is the most vulnerable 2W player.
Maintain IN-LINE.
Revenue above estimate led by improved realisation–
Revenue rose 25% yoy to Rs17.5bn (we estimated Rs17bn)
led by 16% yoy growth in volume and 8% yoy growth in
average realisation. Average realisation was above our
estimate given price hikes and an improved product mix
(higher 3W sales).
Margin stable qoq despite rising cost pressure – Raw
material cost pressure resulted in RM /sales increasing by
190bps yoy to 74.7%. However, despite the sharp increase
in input costs, TVS was able to maintain its operating
margin on account of lower other expenses – at 12.9% of
net sales against 14.5% in 1Q FY11 and 14.8% in 4Q FY11.
As a result, EBITDA margin remained stable yoy at 7.2%.
Earnings higher than estimate led by higher revenue
growth – Driven by strong revenue growth, EBITDA grew
21% yoy to Rs1.25bn. Interest burden increased to
Rs116m. Led by strong revenue growth and stable margins,
earnings grew 46% yoy to Rs588m.
Valuation – Amidst rising competitive intensity and lack of
new launches for the major part of FY12E, we believe TVS
appears to be the most vulnerable amongst the top three
2W players in India. While scooters and mopeds are driving
volume growth, TVS has been unable to ramp up its
motorcycle volumes. Also, although 3W exports are doing
well currently, TVS has failed to gain any meaningful
presence in the domestic market. At 9.4x FY12E earnings
and 4.7x EV/EBITDA, the stock appears fairly valued.
Maintain IN-LINE
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