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TVS Motor
Management meet takeaways
„Cautiously optimistic, Rate Neutral
We recently met management, who seemed positive on demand prospects (highteens growth, doubling of exports over 3 years) as well as the sustainability of
margins. Although risk:reward appears attractive, we believe vulnerability to
increased competition and a slowing economy will continue to act as a drag on
valuations. Rate Neutral with PO of Rs 61.
Two wheelers: Launches, exports to drive growth
TVS Motor expects to maintain mid-teens growth, driven by (1) exports (25-30%
CAGR), through increased penetration in target markets i.e. Africa, Latam etc,
and (2) new launches to plug product gaps in scooters and bikes (by Q1FY13E).
We forecast 9% sales CAGR over 3 years, constrained by weak franchise in bikes
and renewed competition.
Three wheelers: New permits likely to open up
This segment has done well for TVS Motor, driven by exports (3/4th). Going
forward, the company expects higher domestic sales from (1) recent opening of
permits in Karnataka (~30,000 units), where it hopes to garner ~25% share, and
(2) additional permits in Maharashtra. The company has adequate capacity to
ramp to ~100,000 units over next 3 years. We estimate 66,000 units in FY14E.
Margins: Upward trend to be maintained
TVS Motor expects to improve standalone margins this fiscal year (Q1 up 25bps
yoy at 6.7%), driven by (1) increased sales and better mix, and (2) absence of
new launch expense amortisation, at Rs 300mn last year. On a consolidated
basis, improvement should be stronger, due to reduced losses in Indonesia
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TVS Motor
Management meet takeaways
„Cautiously optimistic, Rate Neutral
We recently met management, who seemed positive on demand prospects (highteens growth, doubling of exports over 3 years) as well as the sustainability of
margins. Although risk:reward appears attractive, we believe vulnerability to
increased competition and a slowing economy will continue to act as a drag on
valuations. Rate Neutral with PO of Rs 61.
Two wheelers: Launches, exports to drive growth
TVS Motor expects to maintain mid-teens growth, driven by (1) exports (25-30%
CAGR), through increased penetration in target markets i.e. Africa, Latam etc,
and (2) new launches to plug product gaps in scooters and bikes (by Q1FY13E).
We forecast 9% sales CAGR over 3 years, constrained by weak franchise in bikes
and renewed competition.
Three wheelers: New permits likely to open up
This segment has done well for TVS Motor, driven by exports (3/4th). Going
forward, the company expects higher domestic sales from (1) recent opening of
permits in Karnataka (~30,000 units), where it hopes to garner ~25% share, and
(2) additional permits in Maharashtra. The company has adequate capacity to
ramp to ~100,000 units over next 3 years. We estimate 66,000 units in FY14E.
Margins: Upward trend to be maintained
TVS Motor expects to improve standalone margins this fiscal year (Q1 up 25bps
yoy at 6.7%), driven by (1) increased sales and better mix, and (2) absence of
new launch expense amortisation, at Rs 300mn last year. On a consolidated
basis, improvement should be stronger, due to reduced losses in Indonesia
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