TVS Motor Company will report its Q1 earnings on July 29. The street expects a good set of numbers on a year-on-year basis because of the low base of last year.
So optically the numbers will look good, but there is definitely pressure quarter-on-quarter. The revenues are expected to decline by 26 percent quarter-on-quarter because of a fall in volumes.
On account of the second COVID wave, demand was under quite a bit of pressure. Volumes were down 29 percent quarter-on-quarter at 6.5 lakh units, because of the COVID restrictions in the domestic markets, although exports did well this time around.
Now the margins are also expected to decline about 260 basis points quarter-on-quarter to 7.50 percent because of higher raw material costs and weak operating leverage.
Remember, in Q4 the management came out with 10 percent plus margins, which was a multi-quarter high. But this time around a lag effect of higher raw material prices has hit the margins and that is why margins could fall to about 7.50 percent.
The stock has largely been range bound in the last 3-6 months on account of both pricing as well as demand pressure.