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NEW DELHI : The highest-ever revenue and Ebitda posted by TVS Motor Co. Ltd lifted investor confidence significantly. The stock gained more than 9% on the bourses in morning trades on Friday.

Investor confidence has remained subdued over the recent past looking at the weak demand for two-wheelers in the country.

However, TVS has benefited from strong exports and recorded total two-wheeler sales of 870,000 units in the quarter as against 834,000 units in the second quarter of 2020-21. Two-wheeler export sales grew by 46% compared with the second quarter of last year. Motorcycles registered sales of 439,000 units in the quarter ended September 2021 as against sales of 366,000 units registered in the quarter ended September 2020.

Rising commodity costs have been another concern of investors. Some rise in realizations and prudent cost management meant that the company was able to post a decent operating performance. The average realizations per unit at 61,000 a unit were 15% higher on a year-on-year basis. The company also posted the highest-ever Ebitda of 562 crores as against 430 crore during the quarter ended September 2020.

Analysts at Motilal Oswal Financial Services Ltd said contraction in gross margin was restricted to 50bps sequentially (up 30bp y-o-y) to 23.8% as the commodity cost inflation was diluted by price hikes and better mix.

As the Q2 performance by the company impresses, two-wheeler sales outlook in the country has also improved. The ongoing festive season is likely to help boost sales of two-wheelers.

The domestic two-wheeler volume outlook is positive, and premium motorcycles/scooters could outperform ahead said analysts at Emkay Global Financial Services Ltd. The export outlook is encouraging, owing to healthy demand in Africa and Latin America regions, they add and hence expect 11% volume CAGR over FY22-24.

The confidence on profitability also has improved with Q2 performance. The rising sales can help companies pass on costs.

“We expect the company’s profitability to improve led by strong demand momentum in export markets and gradual recovery in the domestic market," said analysts at Kotak Institutional Equities Ltd.

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