LISTING |
|
|
Rs 48 |
|
Rs54/Rs15 |
|
Rs1 |
Market Cap. |
Rs1168 crore |
PE Ratio |
33 |
P/BV |
1.56 |
COMPANY OVERVIEW:
The company was incorporated as Indian Motorcycle Pvt Ltd on 15th July, 1982. Its name was change to Indo Suzuki Motorcycle Pvt Ltd and it was converted into a public limited company on 12th January, 1984. The name was again changed to from Indo Suzuki Motorcycle Ltd to TVS Suzuki Ltd with effect from 18th August, 1984.
Suzuki exited the joint venture in the year 2001, where Suzuki sold its stake to the TVS group.
TVS Motor is the largest manufacturer of sub 100cc (50cc, 60cc and 70cc category) 2-wheelers in the world and has unique distinction of having sold nearly 4 million mopeds, the highest ever in India.
Vision:
TVS Motor-Driven by the customer
TVS Motor will be responsive to customer requirements consonant with its core competence and profitability. TVS Motor will provide total customer satisfaction by giving the customer the right product, at the right price, at the right time.
TVS Motor-The Industry Leader
TVS Motor will be one among the top two two-wheeler manufacturers in India and one among the top five two-wheeler manufacturers in Asia.
Plant Location & Capacity:
The Company has 4 plants-located at Hosur and Mysore in South India, in Himachal Pradesh (North India) and one at Indonesia. The company has production capacity of 2.5 million units per year.
Product line:
Motorcycle
TVS Apache
TVS Star
TVS Flame
Variomatic Scooter
TVS Scooty Streak
TVS Scooty Pep
TVS Scooty Teenz
Mopeds
TVS XL Super
TVS XL Heavy Duty
New Launches:
In motorcycles, TVS will introduce a new model in the price range of Rs40000-Rs45000 in 2HFY2010.
In scooter, TVS will be launching a new ungeared scooter in 100cc+ segment.
In moped, the company is looking for a modest growth 5% to 6%. The primary focus area will be accessing the non southern market. The company will be focusing on creating awareness for its mopeds.
Dealers Network:
It has a wide dealer network of around 460 & 1200 service outlets.
RECENT DEVELOPMENT:
The third largest two-wheeler manufacturer in India and one among the top ten in the world has posted 3 % growth in April 2009, registering total two wheeler sales of 113,119 units against 109,972 units in the corresponding period of the previous year.
Motorcycle sales stood at 53,235 units in comparison to 58,237 units recorded in April 2008 while scooters registered 18,819 units in April 2009 when compared to 19,034 units recorded in April 2008.
The ongoing slowdown in some countries affected the company’s exports which registered sales of 10,134 units of two wheelers in April 2009 against 10,213 units in the corresponding period of the previous year.
In keeping with its intention to bring racing technology to the common man, the company said that it will further strengthen its premium segment with a new higher capacity motorcycle, which is expected to be launched during this month. The sporty design, outstanding ride dynamics and homegrown technology promises to make it a preferred choice for high performance seekers. The said motorcycle will be packed with high tech features including digital speedo, trip meter and many other functions.
Company has witnessed 5% growth in sales for the month of May 2009, registering total two wheeler sales of 118,574 units against 112,770 units in the corresponding period of the previous year.
The company’s domestic motorcycle sales for the month of May 2009 registered a growth of 3% over the same period of the previous year with total motorcycle sales registering 53,495 units in May 2009 when compared to 54,717 units recorded in May 2008.
Scooters sales stood at 22,486 units in May 2009 when compared to 22,931 units recorded in the corresponding period of the previous year.
The ongoing economic slowdown in some countries continued to affect the company’s exports which registered sales of 11,135 units of two wheelers in May 2009 as against 14,071 units in the corresponding period of the previous year. The company however, witnessed a growth of 10% in exports over the previous month.
The company is all set to strengthen its premium segment with the launch of the Apache RTR 180, scheduled for the current month. The motorcycle’s sporty design, outstanding ride dynamics and technology promises to make it a preferred choice for high performance seekers.
The Apache RTR 180 has already been given rave reviews by auto experts, rating it as a strong, performance driven, zippy bike with excellent stability and handling that makes it a potent contender in the competitive and rapidly evolving Indian performance bike arena.
TVS Motors will launch its `Flame` brand of motorcycles under a new name, but the new SR125 will skip the controversial twin-spark plug technology over which the company is locked in a two-year old legal battle with rival Bajaj Auto, reports Economic Times.
On June 8, the Supreme Court had issued an interim order allowing TVS to continue producing the Flame series but had restricted the company from marketing them.
The order comes on the back of an interim stay from the Madras High Court that had given nod for TVS` plans to manufacture Flame.
Bajaj claims that Flame will be an infringement of its patented twin-spark plug technology
INVESTMENT RATIONAL:
The worst is over for the company as the company `s product is showing good response from the customer.
The decline in the raw material price will increase the operating profit margin for the company. This fiscal could see biggest jump in the operating profit margin.
Strong management confidence
FY2010 will have maximum Net Profit growth due to the lower base.
Slew of new launches in FY2010 will add glitter to the stock and it will help in getting market share for the company.
SHAREHOLDING PATTERN:
|
|
NO. OF SHARES |
% OF TOTAL |
PROMOTER |
136341393 |
|
57.40% |
|
INSTITUTION |
32170520 |
|
13.54% |
|
GENERAL PUBLIC |
69031644 |
|
29.06% |
|
GRAND TOTAL |
237543557 |
|
100% |
|
FINANCIAL:
|
|
31/03/05 |
31/03/06 |
31/03/07 |
31/03/08 |
TOTAL INCOME |
2955.21 |
3305.96 |
3928.19 |
3291.42 |
EXPENDITURE |
-2664.34 |
-3030.48 |
-3717.66 |
-3147.35 |
OPERATING INCOME |
290.87 |
275.48 |
210.53 |
144.07 |
DEPRECIATION |
-89.63 |
-93.91 |
-87.6 |
-94.59 |
PBIT |
|
201.24 |
181.57 |
122.93 |
49.48 |
INTEREST |
|
-0.79 |
-13.12 |
-32.08 |
-2.19 |
PBT |
|
200.45 |
168.45 |
90.85 |
47.29 |
TAX |
|
-62.88 |
-51.45 |
-24.25 |
-3.6 |
EXTRA ORD ITEM |
0 |
0 |
0 |
-11.92 |
PAT |
|
137.57 |
117 |
66.6 |
31.77 |
CHANGE IN TOTAL INCOME: CAGR IN TOTAL INCOME IS 3.65%.
CHANGE IN OPERATING INCOME: CAGR IN OPERATING PROFIT IS -20.88%.
CHANGE IN NET PROFIT: CAGR IN NET PROFIT IS -38.64%.
RATIOS:
|
|
31/03/05 |
31/03/06 |
31/03/07 |
31/03/08 |
EPS |
|
5.792421 |
4.9263158 |
2.804211 |
1.337684 |
OPM |
|
9.842617 |
8.3328292 |
5.359466 |
4.377138 |
NPM |
|
4.655168 |
3.5390628 |
1.695437 |
0.965237 |
INTEREST COVER |
254.7342 |
13.839177 |
3.831983 |
22.59361 |
Key Highlights:
EPS down from Rs5.79 in FY2005 to Rs1.33 in FY2008.
OPM declined from 9.8% in FY2005 to 4.3% in FY2008.
NPM plunged from 4.65% in FY2005 to 0.96% in FY2008.
Interest cover declined from 254 in FY2005 to 22 in FY2008. The debt burden and higher interest rate during the time was the main culprit.
COMAPRISION OF Q3FY2009 WITH Q3FY2008:
|
|
31/12/07 |
% CHANGE |
31/12/08 |
TOTAL INCOME |
896.13 |
-3% |
|
868.99 |
EXPENDITURE |
-860 |
|
|
-824.19 |
OPERATING INCOME |
36.13 |
24% |
|
44.8 |
DEPRECIATION |
-24 |
|
|
-25.35 |
PBIT |
|
12.13 |
|
|
19.45 |
INTEREST |
|
-4.91 |
|
|
-19.41 |
PBT |
|
7.22 |
|
|
0.04 |
TAX |
|
-1.39 |
|
|
-1 |
PAT |
|
5.83 |
-116.46% |
|
-0.96 |
Key Highlights:
Total Income declined by 3%.
Operating Income surged by 24% on back of falling raw material price and better operating margin.
Net Profit plunged by 116%. Higher interest burden was the main reason for the decline in net profit.
VALUATION & OUTLOOK:
We expect the FY2010E EPS to be Rs2.84 and FY2011 EPS to be Rs4.9. So at cmp of Rs51 the stock is trading at 17X to 2010E EPS and 10.4X to 2011E EPS. We value the company at 20X. The fair value arrived on FY2011 earning is Rs98.
We expect the company to outperform the peers in terms of growth. Company has many new launches lined up and lower base will help in giving higher growth in earning.
CONCLUSION:
Investor with one year time horizon can start picking the stock on every dip. We expect the stock has the potential to give good return and outperform the market.
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