TVS Motors Q3 net rises 16 per cent to Rs 178 crore

TVS Motor on Tuesday reported a 16% year-on-year (y-o-y) rise in its net profit to Rs 178.39 crore for the three months to December, 2018. The growth in the bottom line was driven by 26% year-on-year rise in revenues to Rs 4,664 crore which in turn was driven by 19% y-o-y increase in volumes.

However, the operating profit margins shrank 7 bps year-on-year to 8.1%, impacted by an increase in the share of raw materials to revenue of 400 bps y-o-y. The company’s EBITDA (earnings before interest, tax, depreciation and amortisation) stood at `375.7 crore, up 25% y-o-y.

While volumes for the two-wheeler industry grew 9% y-o-y in Q3FY19, TVS Motor’s volumes rose 19% y-o-y to 8,09,147 units. Between April and December, 2018, TVS Motor was able to increase its market share by 300 bps to 19%. Analysts with Jefferies observed that TVS Ntorq, launched in February 2018, did not cannibalise Jupiter, and it has helped the company gain the market share. Analysts attribute this to the company’s presence in the fastest growing segments of the two-wheeler industry.

KN Radhakrishnan, CEO, TVS Motor, observed during the analysts call that the product range including Ntorq (125cc scooter), Jupiter (110cc scooter), TVS Radeon (110cc bike) and Apache (premium bike) “have helped us grow faster than the industry”.

The December 2018 quarter witnessed muted growth due to the higher cost of third-party insurance mandated by the Supreme Court in September last year and the liquidity crisis. “The third-party insurance norm pushed up the prices of two-wheelers by 10-12% due to which there was subdued demand in the industry. In addition to that, there was liquidity crisis, but since then the overall economic scenario is becoming better, we expect better Q4,” Radhakrishnan added.

On the price increase of two-wheelers due to implementation of ABS (anti-lock braking system) norm post April, 2019, K Gopala Desikan, group CFO, TVS Motor, said that while price increase is contemplated, it is unlikely to witness change in demand as customers in premium segment prefer the technology.

The stock of TVS Motor closed at `533.85 on the Bombay Stock Exchange (BSE) on Tuesday, up 2.94% from Monday’s close. The stock has gained 7.2% in the last three months.

TVS Motor Company