Citi said it was positively surprised by TVS Motor's Q1 realisations, which drove a slight EBITDA beat. While higher capital costs (depreciation+ interest) resulted in a PAT miss, the company’s pricing and gross margin trends have been commendable, according to the brokerage.
Shares of TVS Motor Company rallied five percent in early trade on Friday after the company reported a net profit of Rs 53.1 crore for the quarter ended June 30, 2021. The Chennai-based company had posted a loss of Rs 139.1 crore in the corresponding quarter last year.
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Total income during the quarter under review jumped to Rs 3,934 crore from Rs 1,432 crore in the year-ago period. The company recorded the highest ever quarterly revenue in international business.
The company’s EBITDA in Q1FY22 was at Rs 274 crore as against negative EBITDA of Rs 49 crore, YoY.
Here’s what brokerages said about TVS Motor’s Q1 earnings and stock:
Global brokerage firm Jefferies said that the company’s gross margin fell just 40 bps QoQ despite severe commodity cost pressures.
TVS Motor’s exports are holding up well and margins should expand sequentially. The company also reported its highest-ever gross-profit-per-vehicle. TVS is also turning aggressive on EVs, the brokerage noted.
It maintained a ‘buy’ call on the stock with a target price of Rs 800 per share.
Jefferies believes Indian two-wheeler demand should recover from an abnormal cyclical trough.
Citi said it was positively surprised by TVS’ Q1 realisations, which drove a slight EBITDA beat.
While higher capital costs (depreciation+ interest) resulted in a PAT miss, the company’s pricing and gross margin trends have been commendable, Citi said.
The brokerage maintained a ‘sell’ rating with a target price of Rs 530 per share.
Domestic brokerage Motilal Oswal has a ‘neutral’ rating on the stock with a target of Rs 625 a share.
"TVS Motor Company’s operating performance was in-line, led by good cost management. However, higher interest/depreciation led to below-estimate PAT. As volumes return, profitability is expected to recover to over 10%, Motilal Oswal said.
Valuations at 22.3x/17.1x FY22E/FY23E EPS largely reflect strong earnings growth as well as the increasing risk from EVs, it added.
At 10:10 am, the shares of TVS Motor Company were trading 1.84 percent higher at Rs 571.85 apiece on the BSE.
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