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MUMBAI : Shares of TVS Motor Co. Ltd gained as much as 16.7% after the company's standalone net profit surged about three-fold to Rs289 crore in the March 2021 quarter from Rs74 crore for the same quarter last year.

At 2.30 pm, TVS Motor was trading at Rs641.90 up 13.35% from its previous close, while the benchmark index, Sensex, gained 1.67% to 49,762.85.

Revenue from operations grew by 53% at Rs5,322 crore for the quarter under review against Rs3,481 crore reported in the fourth quarter of 2019-20. Profit before tax in Q4 March 2021 stood at Rs387 crore, up by 331% from Rs90 crore in Q4 March 2020.

Overall two-wheeler and three-wheeler sales, including exports, registered a growth of 47% at 928,000 units in the quarter ended March 2021 as against 633,000 units registered in the quarter ended March 2020.

The company reported operating earnings before interest, tax, depreciation and amortization (Ebitda) of Rs536 crore for the fourth quarter, recording a growth of 119% as against Rs245 crore in fourth quarter of 2019-20. Operating Ebitda margin for the quarter was at 10.1% against 7% reported in fourth quarter of 2019-20.

Analysts at Motilal Oswal Financial Services said TVS’s volume growth is now falling in line with the domestic market as a large portion of the portfolio gaps has been filled, but the ramp-up in exports supports overall growth.

"However, it is seeing benefit from economies of scale and operating leverage, resulting in Ebitda margins trending towards the double digits. Valuations at 25.5 times/18.7 times FY22/FY23 estimated earnings per share (EPS) already reflect a large portion of the earnings recovery. The brokerage has a "Neutral" rating on the stock.

During the year, focused working capital management and improved operating performance helped the company generate free cash flow of Rs1,887 crore. These proceeds are used to reduce the debt.

Emkay Global Financial Service also raised the earnings estimates for the stock and upgraded it to "Buy".

"TVS's Ebitda margin expanded to 10.1%, above estimates, mainly due to lower-than-expected impact of commodity inflation, cost savings and inventory gains. In addition, the export outlook is encouraging across most markets on higher commodity prices and better foreign exchange availability for importers," it said.

The brokerage raised its FY22/23 EPS estimates by 15%/14% to Rs21.3/Rs28.4 due to the increase in volume and margin assumptions.

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