TVS Motor Co. Ltd put up a stellar show for the September quarter, as two-wheeler manufacturers bucked the economic recession that had hurt other auto makers. A superior product mix and sales growth across product categories boosted volumes by 15.5% from a year ago.

TVS bike’s showroom in Bangalore. Photo: Hemant Mishra/Mint.

Growth in revenue was driven largely by the 27.2% year-on-year (y-o-y) growth in scooter sales, followed by the 20% growth in three-wheeler sales. These two segments enjoy better profitability and, hence, support operating profit margins.

Perhaps, that’s the reason the fall in operating margins was restricted to a mere 24 basis points compared with a year ago, despite the 176 basis points increase in the raw material cost as a percentage to sales during the period. Lower other expenditure and employee costs helped contain expenditure. One basis point is one-hundredth of a percentage point.

Also See | Quarterly performance (PDF)

TVS clocked an 18.9% y-o-y increase in operating profit to 146 crore. Further, it beat market estimates on net profit that increased by 39.7% from the year-ago period to 76.5 crore.

But the company’s shares did not react to the strong results, closing marginally lower at 66.30, discounting fiscal 2012 estimated earnings around 11 times.

Nevertheless, the management’s reiteration of 15% sales growth this year with strong traction in scooters and three-wheelers is heartening. The 20% y-o-y growth in retail sales in October supports its growth target. Although, the company’s sales were 6.3% lower due to the one-week maintenance shutdown.

Also, the management’s forecast of softer commodity prices would help it deliver improved operating profit margin for the full year—a key factor to improve valuations.