MUMBAI: Shares of TVS Motor Company fell 3.1% on Friday after the company reported a 43.3% decline in its consolidated net profit to ₹81.85 crore for the quarter ended March.
At 0152pm, the stock traded 0.7% lower at ₹330.75, while the benchmark Sensex was down 0.5% at 32033.47.
The two-wheeler major's total income declined nearly 17% from the year-ago quarter to ₹4,128.67 crore. It reported profit before tax of ₹114.83 crore compared with ₹217.19 crore during Q4FY19.
In a regulatory filing, the company said it has successfully transitioned to BS-VI emission norms and almost 85% it despatched during the quarter were BS VI products.
For the quarter, Ebitda (earnings before interest, taxes, depreciation and amortization) margin, not accounting for one-time additional discount of ₹22 crore and an exceptional item of ₹32 crore towards covid-19, was at 7.6% compared with 7% in the year-ago period.
Analysts at Motilal Oswal in a note to clients said, "The company’s operating performance was impacted by passing cost inflation in BS-VI without the loading of margins as well as discounts offered on BS-IV inventory. The company said volumes declined 30% YoY led by decline in gross margins leading a cut in FY2020/2021 EPS by 26%/8% to volume weakness". The brokerage firm has a neutral rating on the stock.
The company sold 32.63 lakh units in fiscal 2019-20, down from 39.14 lakh units in 2018-19. During the fourth quarter, the company’s total two-wheeler and three-wheeler sales, including exports, stood at 6.33 lakh units compared with 9.07 lakh units for the quarter ended 31 March, 2019.
Analysts at Emkay believe that "Led by the lockdown and expectation of gradual pick-up in demand, reducing FY2021E volume estimate by 18% to 2.4mn units, but we broadly retain our FY2022E volume forecast at 3.3mn units. Expect recovery from second half of FY2021, led by a low base, pent-up demand and better rural sentiment. The stock trades at FY2022E P/E of 24 times, which is expensive in comparison to 14-18x for larger peers. Retain Sell rating."