TVS Motor Company will report its third-quarter earnings on Tuesday and analysts expect good volume growth this time around.
- TVS Motor is expected to post quite a good quarter in terms of the volume growth. It has been the best performer in the two-wheeler space. A 20 percent volume growth year-on-year (YoY) is what TVS has done while peers like Hero Motocorp have seen a single digit volume growth of just about 5.5 percent.
- The reasons for that is because some of its new launches like the Ntorq, the Apache etc have done pretty well and those have contributed to volumes this time around. That will lead to a revenue growth of almost 23 percent. The street is working with a figure of Rs 4,550 crore.
- However, the problem pocket for TVS Motor has been on the margin front. Despite taking price hikes, the company will not grow its margin substantially. In fact, margins are expected to be flat around 7.7 percent versus 7.8 percent that it did same time last year.
- The reason for that is because of lower scale, commodity inflation and higher discounts that the company had to offer in order to clear its inventory. However, higher discounts is something that was seen across the sector so that may not be taken too negatively by the street.
- A profit growth of single digit is expected because higher tax rates that the company had to incur will limit the profit growth this time around.
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