TVS Motor Company shares raced as much as 10 per cent, hitting an all-time high of Rs 947.8 on the BSE, on Friday after the motorcycle company reported a higher-than-expected set of numbers for the quarter ended June.
TVS Motor Company said its consolidated net profit stood at Rs 297 crore for the first quarter ended June 30. It had reported a net loss of Rs 15 crore in the COVID-19 hit April-June quarter of the last fiscal.
The first quarter numbers were not strictly comparable with the first quarter of last year due to lockdowns, the company stated. It noted that the overall two and three-wheeler sales, including exports, rose to 9.07 lakh units in the quarter ended June 2022 against 6.58 lakh units registered in the quarter ended June 2021.
The motorcycle sales rose to 4.34 lakh units in the June quarter compared to 4.05 lakh units in the year-ago period. Similarly, scooter sales for the June 2022 quarter rose to 3.06 lakh units against 1.38 lakh units in the year-ago period. TVS said it recorded the highest two-wheeler exports of 2.96 lakh units in the first quarter compared to 2.9 lakh units a year ago, as per the PTI report.
The company’s board approved the issue of non-convertible debentures (NCDs) aggregating to Rs 125 crore on a private placement basis, it added. Shares of the company closed 2.35 per cent up at Rs 869.20 apiece on the BSE.
Should You Invest?
UBS Securities noted the company’s solid set of quarterly numbers but added that the best is yet to come. It has raised its earnings per share estimate for FY23 by 14 percent, and for FY24 by 5 percent. The brokerage house said that from the valuation standpoint, TVS Motor is relatively cheaper than Bajaj Auto and Eicher Motors.
Even as UBS Securities and Reliance Securities are bullish, Citi says ‘sell’ TVS Motor stock as the competitive landscape is tough and the company has lost market share in the domestic bikes segment.
However, Citi pointed out that April-June earnings were slightly ahead of estimate. It also noted that the management outlook is positive and that the company expects volume to sustain.
Analysts at Prabhudas Lilladher said:"We believe TVS will be able to sustain growth momentum and grow ahead of the industry, driven by (1) new product launches in ICE & EV segments along with its revamped product portfolio (2) strong exports and premiumisation and (3) margin protection through cost reduction efforts and price hikes. We marginally increase our EPS estimates by 2 per cent each for FY23/24 to factor healthy 1Q performance. Maintain ‘BUY’ with revised target price of Rs 950 at 24x on FY24E EPS and Rs 34 for TVS Credit."
TVS Motor Company is the third largest 2-wheeler company in India with a revenue of over ₹18,217 crore (over US$2.9 billion). It has an annual sale of more than 3 million units and an annual capacity of over 4.95 million vehicles. TVS Motor is also the 2nd largest exporter in India with exports to over 60 Countries.