TVS Motor Company
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
TVSL IN
475
200.6 / 2.7
503 / 240
-15/16/-12
1086
30 October 2020
2QFY21 Results Update | Sector: Automobile
CMP: INR422
TP: INR445 (+5%)
Neutral
Margin beat led by favorable Fx and lower expenses
Cost cuts and volume growth to drive margins
TVS Motor Company (TVSL)’s operating performance was led by favorable
Fx and lower cost. However, commodity cost inflation, INR appreciation,
and the reversal of employee cost to pre-COVID levels from Oct’20 would
dilute margins.
We cut our FY21E EPS by 9% due to an increase in depreciation and
interest, while we maintain FY22E EPS. Maintain
Neutral,
with TP of INR445.
2QFY21 revenue / EBITDA / adj. PAT grew ~5.9%/12.6%/0.5% to
~INR46b/INR4.3b/INR1.97b. 1HFY21 revenue / EBITDA / adj. PAT contracted
~31.5%/48%/83%.
Net sales grew by 6% YoY to INR46b as volumes declined 2% YoY and
realizations grew ~8.1% YoY (-1.1% QoQ) to INR53.1k (v/s est. INR54.7k),
driven by the BS6 cost pass-through.
Gross margins contracted 70bp QoQ (-320bp YoY) to 23.5% (est. 25%) on
the impact of BS6 cost inflation (as contribution margins have not yet been
passed through). Although, the impact was diluted by favorable Fx
(estimated at 120bp).
The EBITDA margin expanded by 55bp YoY to 9.3% (v/s est. 8.6%) on lower
other expenses. EBITDA grew 12.6% YoY to INR4.3b (v/s est. INR4b). Higher
other income boosted adj. profit to ~INR1.96b (in line with estimate).
In 1HFY21, TVSL’s CFO grew 167% YoY to INR14.5b, driven by a sharp
reduction of INR11b in working capital. It invested ~INR2b in capex and
~INR1.5b in subsidiaries and associates.
Retail sales grew marginally during Navratri and Dussehra,
predominantly
in premium products. With urban market retail is reaching pre-COVID levels
and rural is positive, the company expects good sales during Diwali.
TVSL started accounting for a sharp reduction in MEIS incentives from
Sep’20, and it accounted for incentives at earlier rates up to Aug’20. It
would mitigate this loss through some price increases and cost reduction.
Financing
penetration stood at 46% (v/s 56% in 4QFY20 and 46–47% in
2QFY20) – TVS Credit has 50% share. TVS Credit Services is seeing
collections at similar, if not better than, pre-COVID levels.
Employee cost was lower in 1H due to salary cuts; it has been restated to
pre-COVID levels from 1
st
Oct.
Capex:
It has increased its capex target to INR5b for FY21 (v/s INR3b
earlier). Furthermore, it would invest an additional INR0.9–1b in TVS Credit
(~INR0.5b) and Norton. In 1HFY21, it invested INR1.5b in subsidiaries.
TVSL’s volume growth is now falling in line with the market as a large
portion of portfolio gaps has been filled. Valuations at 21.2x/16.8x
FY22E/FY23E EPS already reflect a large portion of earnings recovery.
Maintain
Neutral,
with TP of ~INR445 (~18x Sep’22 EPS + INR40 for NBFC).
Financials & Valuations (INR b)
FY20 FY21E FY22E
Y/E March
Sales
164.2 158.0 194.5
EBITDA
13.5
12.6 18.9
Adj. PAT
6.2
4.7
9.5
EPS (INR)
13.0
9.8 19.9
EPS Gr. (%)
-7.8 -24.4 102.4
BV/Sh (INR)
76.2
81.8 96.9
Ratios
RoE (%)
17.7
12.4 22.3
RoCE (%)
17.1
13.6 22.9
Payout (%)
33.8
42.8 24.2
Valuations
P/E (x)
32.5
43.0 21.2
P/BV (x)
5.5
5.2
4.4
Div. Yield (%)
0.8
0.8
0.9
FCF Yield (%)
3.3
2.1
4.8
Shareholding pattern (%)
As On
Sep-20 Jun-20
Promoter
57.4
57.4
DII
21.9
22.0
FII
10.6
10.5
Others
10.1
10.1
FII Includes depository receipts
Op. performance driven by substantially lower other expenses
Sep-19
57.4
19.0
13.2
10.4
Highlights from management commentary
Valuation and view
Jinesh Gandhi - Research analyst
(Jinesh@MotilalOswal.com)
Vipul Agrawal - Research analyst
(Vipul.Agrawal@MotilalOswal.com)
30 October 2020
1
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
TVS Motor Company
S/A Quarterly Performance
Y/E March (INR m)
1Q
Vols ('000 units)
Growth (%)
Realn (INR '000/unit)
Growth (%)
Net Sales
Growth (%)
RM (% of sales)
Employee Expenses
Emp cost ( % of sales)
Other expenses
Other exp (% of sales)
EBITDA
EBITDA Margin(%)
Interest
Depreciation
Other Income
PBT before EO Exp
EO Exp
PBT after EO Exp
Tax rate (%)
Reported PAT
Adjusted PAT
Growth (%)
923.2
(0.5)
48.4
7.7
44,686
7.1
75.1
2,489
5.6
5,063
11.3
3,558
8.0
291
1,194
12
2,085
0
2,085
31.8
1,423
1,423
(4.6)
(INR m)
FY20
2Q
885.8
(18.6)
49.1
7.0
43,478
(12.9)
73.4
2,337
5.4
5,424
12.5
3,820
8.8
285
1,241
49
2,343
-760
3,103
17.8
2,550
1,953
(7.6)
FY20
2Q
885.8
-18.6
14.4
49.1
7.0
73.4
5.4
12.5
26.6
8.8
5.9
3Q
821.5
(17.0)
50.2
6.6
41,255
(11.5)
72.2
2,332
5.7
5,503
13.3
3,633
8.8
211
1,213
9
2,218
760
1,457
16.9
1,211
1,808
1.3
4Q
632.9
(30.2)
55.0
13.7
34,814
(20.7)
75.0
2,227
6.4
4,041
11.6
2,449
7.0
235
1,243
251
1,222
323
898
17.8
739
993
(27.8)
1Q
266.9
(71.1)
53.6
10.8
14,317
(68.0)
75.9
1,970
13.8
1,972
13.8
-488
(3.4)
523
911
26
-1,896
0
(1,896)
26.7
-1,391
-1,391
(197.7)
FY21E
2Q
3QE
867.8
(2.0)
53.1
8.1
46,055
5.9
76.5
2,143
4.7
4,365
9.5
4,301
9.3
407
1,331
111
2,674
0
2,674
26.6
1,963
1,963
0.5
927.6
12.9
53.6
6.7
49,719
20.5
76.3
2,350
4.7
4,981
10.0
4,477
9.0
350
1,350
50
2,827
0
2,827
25.2
2,115
2,115
17.0
FY20
4QE
888.2
40.3
54.0
(1.9)
47,926
37.7
75.8
2,386
5.0
4,958
10.3
4,272
8.9
338
1,329
31
2,637
0
2,637
24.8
1,983
1,983
99.8
3,263.5
(16.6)
50.3
8.2
1,64,233
(9.8)
73.9
9,384
5.7
20,031
12.2
13,459
8.2
1,022
4,890
321
7,867
323
7,544
21.5
5,922
6,176
(7.8)
FY20
4QE
888.2
3,263.5
2,950.5
(9.6)
53.6
6.4
1,58,017
(3.8)
76.2
8,849
5.6
16,276
10.3
12,562
7.9
1,618
4,920
218
6,242
6,242
25.2
4,669
4,669
(24.4)
FY21E
2QE
2,950.5
10.1
53.6
6.4
76.2
5.6
10.3
23.9
7.9
4.8
867.8
-2.0
14.3
54.7
11.5
75.0
4.8
11.6
25.0
8.6
6.0
FY21E
FY21E
2QE
867.8
(2.0)
54.7
11.5
47,482
9.2
75.0
2,300
4.8
5,499
11.6
4,072
8.6
350
1,200
30
2,552
0
2,552
25.0
1,913
1,913
(2.0)
Key performance indicator
Y/E March (INR m)
1Q
Volumes ('000 units)
Growth (%)
Dom. 2W Mkt Sh (%)
Net Realization
Growth YoY (%)
Cost Break-up
RM Cost (% of sales)
Staff Cost (% of sales)
Other Cost (% of sales)
Gross Margins (%)
EBITDA Margins (%)
EBIT Margins (%)
E:MOFSL Estimates
923.2
-0.5
14.2
48.4
7.7
75.1
5.6
11.3
24.9
8.0
5.3
(INR m)
3Q
821.5
-17.0
14.3
50.2
6.6
72.2
5.7
13.3
27.8
8.8
5.9
4Q
632.9
1Q
266.9
FY21E
2Q
3QE
867.8
-2.0
13.9
53.1
8.1
76.5
4.7
9.5
23.5
9.3
6.4
927.6
-30.2
12.2
55.0
-71.1
14.4
53.6
12.9
53.6
40.3
54.0
-16.6
13.9
50.3
13.7
75.0
6.4
11.6
25.0
7.0
3.5
10.8
75.9
13.8
13.8
24.1
-3.4
-9.8
6.7
76.3
4.7
10.0
23.8
9.0
6.3
-1.9
75.8
5.0
10.3
24.2
8.9
6.1
8.2
73.9
5.7
12.2
26.1
8.2
5.2
30 October 2020
2
 Motilal Oswal Financial Services
TVS Motor Company
Exhibit 1: Trend in volumes and volume growth
Volumes ('000 units)
32.0
16.3 15.0
15.7 14.7 19.8
2.0 (0.5)
Growth (%)
(2.0)
Exhibit 2: Trend in blended realizations
Realizations (INR '000/unit)
(17.0)
(18.6)
(30.2)
(71.1)
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 3: Motorcycle, Scooter, and overall market share trend
25
20
15
10
5
0
Motorcycles
Scooters
Overall
Source: Company, MOFSL
Exhibit 4: Net sales and growth trends
18.6 24.0
40.9
Net sales (INR b)
22.7 22.8 26.1
9.5 7.1
Growth (%)
5.9
Exhibit 5: Contributions of different segments in volume mix
Motorcycles
Scooters
Mopeds
3Ws
3 3 3 4 4 4 5 4 5 6 7 4 4
24 26 26 23 22 22 24 19 19 20 22 20 23
35 33 31 31 36 36 30 32 38 34 26 31 31
39 38 39 42 39 38 41 45 39 40 45 45 42
(11.5)
(12.9)
(20.7)
(68.0)
Source: Company, MOFSL
Source: Company, MOFSL
30 October 2020
3
 Motilal Oswal Financial Services
TVS Motor Company
Exhibit 6: EBITDA and EBITDA margin trend
EBITDA (INR m)
EBITDA margin (%)
8.8
7.0
9.3
8.9 8.1
8.8
8.6 8.1
8.0
7.4 7.8
7.1
Exhibit 7: PAT and growth trajectory
PAT
Growth (%)
0.5
20.2 16.4 30.6 15.2
(0.9) 15.6(17.0)(4.6) (7.6) 1.3
(27.8)
(3.4)
(197.7)
Source: Company, MOFSL
Source: Company, MOFSL
Key takeaways from earnings call
Festive performance and demand outlook:
Retail sales grew marginally during
Navratri and Dussehra, predominantly in premium products. With urban market
retail reaching pre-COVID levels and rural positive, the company expects good
sales during Diwali. TVS would perform better than the industry on the back of its
portfolio.
Financing:
Penetration was at 46% (v/s 56% in 4QFY20 and 46–47% in 2QFY20) –
TVS Credit has 50% share. TVS Credit Services is seeing collections that are similar
to, if not better than, pre-COVID levels. Capital adequacy is at 17%. In 2Q, it
reported PBT of INR143m, after making provisions of INR250m.
TVSL took a price increase of 1.5% in 2Q and 1% in Oct’20.
Cost-cutting measures initiated two years ago are yielding results. The focus has
been on material cost, marketing cost (through digitalization), etc. Employee cost
has been lower in 1H due to salary cuts; it has been restated to pre-COVID levels
from 1
st
Oct.
Export sales:
TVS performed better than the industry as its export sales were
down by only 29% (v/s industry decline of 40%) during the quarter.
Export incentives:
TVSL started accounting for sharp reduction in MEIS incentives
from Sep’20 and accounted for incentives at earlier rates up to Aug’20 based on
feedback from consultants. It would mitigate this loss through some price
increases and cost reduction.
The Indonesia subsidiary achieved PBT breakeven in 2Q (v/s USD1.03m loss in
2QFY20) based on 2W volume growth of 5.5% to 14.7k units.
Capex:
It has increased its capex target to INR5b for FY21 (v/s INR3b earlier).
Furthermore, it would invest an additional INR0.9–1b in TVS Credit (~INR0.5b) and
Norton. This is over and above the INR1.5b invested in subsidiaries in 1HFY21.
30 October 2020
4
 Motilal Oswal Financial Services
TVS Motor Company
Valuation and view
Volumes to be impacted across businesses in FY21:
We expect FY21 to be
another year of challenges for the domestic 2W industry and TVS due to the
impact of the Coronavirus pandemic. As a result, TVS should see some pressure in
export volumes as well. Its relatively weaker position in the Entry-level Bike
segment due to gaps in the product portfolio may lead to higher decline v/s peers
in the Motorcycle segment. However, we expect Scooter to outperform the
industry. We expect volumes to decline ~10% in FY21E and grow 22% in FY22E.
Volume outperformance, market share gains to slow:
We estimate TVSL’s
volume outperformance over the domestic 2W industry to slow as gaps in the
product portfolio are largely plugged. This is reflected in its FY20 performance,
when TVSL actually lost market share in the domestic 2W industry by ~100bp to
~13.8%. Furthermore, in the current environment, we expect consumers to prefer
strong brands and segment leaders. This, coupled with the expectation of rural-
led recovery, does not augur well for TVSL in terms of market share gains.
Scale to drive 150bp margin expansion over FY20–22E:
There are several levers
to improve margins: a) a better mix, b) Fx benefit, c) cost-cutting initiatives, and d)
operating leverage (particularly on marketing and employee cost). Hence, we
estimate EBITDA margin expansion of 150bp (FY20–22E) to 9.7% by FY22E. This
would result in a standalone EPS CAGR of ~25% over FY20–23E.
NBFC arm turns subsidiary to boost consolidated performance:
TVS Credit
Services, its ~85% subsidiary, is a fast-growing NBFC company with a presence in
financing for 2Ws, Used Cars, Tractors, etc. The captive NBFC arm has been
particularly helpful to offset the impact of the liquidity crunch in the last 21
months. We value this NBFC at ~INR40/share (post 20% Holdco discount).
Valuation and view:
While volume recovery during the festive season has been
lower than expected, growth momentum post the festive season would be the
key monitorable. We expect TVSL’s market share gains to slow as there are
limited product gaps in its portfolio now. Furthermore, the electrification of 2W
could threaten TVSL’s competitive positioning in Scooters as we expect this space
to be cannibalized by E-Scooters. We cut our FY21E EPS by 9%, but maintain
FY22E EPS to adjust for slower-than-expected volume recovery. Valuations at
43x/21.2x FY21E/FY22E EPS already reflect a large portion of earnings recovery.
Maintain
Neutral,
with TP of ~INR445 (18x Sep’22 EPS + INR40/share for value in
NBFC).
Exhibit 8: Revised estimates
(INR m)
Volumes (m units)
Net Sales
EBITDA
EBITDA (%)
Net Profit
EPS (INR)
Rev
2.95
1,58,017
12,562
7.9
4,669
9.8
FY21E
Old
2.97
1,62,955
12,792
7.9
5,144
10.8
Chg (%)
-0.6
-3.0
-1.8
10bp
-9.2
-9.2
Rev
3.61
1,94,546
18,871
9.7
9,451
19.9
FY22E
Old
3.54
1,96,362
18,851
9.6
9,516
20.0
Chg (%)
2.0
-0.9
0.1
10bp
-0.7
-0.7
Source: MOFSL
30 October 2020
5
 Motilal Oswal Financial Services
TVS Motor Company
Exhibit 9: TVS Credit Services – valuable investment
INR M
FY13
FY14
Loan book
10,630
17,020
Loan book Gr (%)
101
60
Leverage (x)
6.2
6.5
RoA (%)
0.5
1.0
PAT
52
172
Net Worth
1,720
2,620
RoE (%)
3.0
6.6
P/B (x)
Equity Value
TVSLs Stake (%)
Value for TVSL @ Post 20% Hold Co Discount
Value for TVSL (INR/sh) @ 20% HoldCo
26,360
55
6.7
1.1
292
3,920
7.5
FY15
39,540
50
7.3
1.3
507
5,410
9.4
FY16
50,000
26
7.2
1.7
870
6,980
12.5
FY17
61,540
23
7.0
2.2
1,384
8,834
15.7
1
FY18
83,350
35
7.2
1.8
1,483
11,511
12.9
1
11,511
84.27
FY19
92,150
10.6
6.7
1.6
1,505
13,720
11.0
1
13,720
84.27
FY20E
97,053 1,18,033
5
22
5.6
5.7
1.2
1.4
1,165
1,652
17,385 20,537
6.7
8.0
1
1.25
17,385 25,671
84.27
84.27
11,720 17,307
25
36
FY21E
FY22E
Source: Company, MOFSL
Exhibit 10: P/E band
60.0
50.0
40.0
30.0
20.0
10.0
0.0
37.8
24.6
11.5
4.9
27.3
P/E (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
54.8
Exhibit 11: P/BV band
12.0
9.0
6.0
3.0
0.0
P/B (x)
Min (x)
Avg (x)
+1SD
7.5
4.9
2.2
1.0
4.8
Max (x)
-1SD
11.3
Source: MOFSL
Source: MOFSL
30 October 2020
6
 Motilal Oswal Financial Services
TVS Motor Company
Story in charts
Exhibit 12: Volume growth trajectory
Volumes (units)
22.4
5.4
9.1
18.6
13.0
10.6 9.3
-9.6
-16.6
FY15
FY16
FY17
FY18
FY19
FY20
FY21E FY22E
FY15
FY16
FY17
FY18
FY19
Growth (%)
22.2
Exhibit 13: Revenue growth trend
26.1
Net sales (INR m)
25.1
Growth (%)
20.0
23.1
-9.8
-3.8
FY20
FY21E FY22E
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 14: EBITDA margins trend upwards
EBITDA (INR m)
7.7
7.9
EBITDA margin (%)
9.7
6.0
7.3
7.1
8.2
7.9
Exhibit 15: Trend in PAT and PAT growth
PAT (INR m)
Growth (%)
102.4
33.4
40.7
14.1
18.7
1.1
(7.8)
(24.4)
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
FY22E
FY15
FY16
FY17
FY18
FY19
FY20
FY21E FY22E
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 16: FCF to remain strong despite high capex plans
CFO (INR b)
Capex (INR b)
FCF (INR b)
Exhibit 17: Sharp improvement in return ratios
27.2
22.7
RoCE (%)
25.6
25.1
RoE (%)
21.5
17.7
25.7
23.8
24.7
12.4
23.6
17.1
13.6
22.9
22.3
21.9
-3.7
FY15
-4.9
FY16
-6.1
FY17
-7.7
FY18
-7.3
FY19
-6.5
FY21E FY22E
-5.0
-7.3
FY20
FY15
FY16
FY17
FY18
FY19
FY20
FY21E FY22E
Source: Company, MOFSL
Source: Company, MOFSL
30 October 2020
7
 Motilal Oswal Financial Services
TVS Motor Company
Key operating metrics
Exhibit 18: Snapshot of revenue model
units
Motorcycle
Growth (%)
% of total vols
Scooter
Growth (%)
% of total vols
Moped
Growth (%)
% of total vols
Total 2Ws
Growth (%)
% of total vols
3Ws
Growth (%)
% of total vols
Domestic
Growth (%)
% of total vols
Exports
Growth (%)
% of total vols
Total volumes
Growth (%)
ASP (INR/unit)
Growth (%)
Net Sales (INR m)
Growth (%)
FY16
10,16,807
6.2
38.0
8,12,527
15.0
30.3
7,38,547
-3.5
27.6
25,67,881
5.7
95.9
1,10,821
-1.8
4.1
22,24,902
4.8
83.1
4,53,800
8.3
16.9
26,78,702
5.4
41,455
4.9
1,11,047
10.6
FY17
10,67,803
5.0
36.5
8,70,863
7.2
29.8
9,10,519
23.3
31.1
28,53,885
11.1
97.6
69,254
-37.5
2.4
25,02,050
12.5
85.6
4,21,089
-7.2
14.4
29,23,139
9.1
41,515
0.1
1,21,353
9.3
FY18
13,29,105
24.5
38.3
11,34,918
30.3
32.7
8,76,932
-3.7
25.3
33,67,426
18.0
97.2
98,684
42.5
2.8
28,91,895
15.6
83.4
5,74,215
36.4
16.6
34,66,110
18.6
43,782
5.5
1,51,754
25.1
FY19
15,39,226
15.8
39.3
13,01,115
14.6
33.2
8,96,917
2.3
22.9
37,58,551
11.6
96.0
1,56,434
58.5
4.0
31,53,247
9.0
80.5
7,61,738
32.7
19.5
39,14,985
13.0
46,513
6.2
1,82,099
20.0
FY20
13,52,237
-12.1
41.4
10,73,459
-17.5
32.9
6,48,944
-27.6
19.9
30,89,557
-17.8
94.7
1,73,911
11.2
5.3
24,22,650
-23.2
74.2
8,40,818
10.4
25.8
32,63,468
-16.6
50,325
8.2
1,64,233
-9.8
FY21E
11,98,911
-11.3
40.6
9,61,489
-10.4
32.6
6,31,727
-2.7
21.4
28,08,416
-9.1
95.2
1,42,130
-18.3
4.8
21,46,290
-11.4
72.7
8,04,256
-4.3
27.3
29,50,546
-9.6
53,555
6.4
1,58,017
-3.8
FY22E
14,72,376
22.8
40.8
12,10,738
25.9
33.6
7,25,075
14.8
20.1
34,26,107
22.0
95.0
1,80,920
27.3
5.0
26,53,634
23.6
73.6
9,53,393
18.5
26.4
36,07,027
22.2
53,935
0.7
1,94,546
23.1
30 October 2020
8
 Motilal Oswal Financial Services
TVS Motor Company
Financials and valuations
Standalone – Income Statement
Y/E March
Volumes (units)
Growth (%)
Net Sales
Change (%)
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income - Rec.
PBT bef. EO Exp.
EO Expense/(Income)
PBT after EO Exp.
Current Tax
Deferred Tax
Tax Rate (%)
Reported PAT
PAT Adj for EO items
Change (%)
FY16
26,78,702
6.4
1,11,047
10.6
8,099
7.3
2,361
5,738
487
1,039
6,289
0
6,289
1,397
0
22.2
4,893
4,893
40.7
FY17
29,23,139
9.1
1,21,353
9.3
8,571
7.1
2,878
5,693
440
1,734
6,987
0
6,987
1,406
0
20.1
5,581
5,581
14.1
FY18
34,66,110
18.6
1,51,754
25.1
11,750
7.7
3,387
8,362
566
990
8,786
0
8,786
1,971
190
24.6
6,626
6,626
18.7
FY19
39,14,985
13.0
1,82,099
20.0
14,333
7.9
3,993
10,340
806
75
9,610
0
9,610
2,768
141
30.3
6,701
6,701
1.1
FY20
32,63,468
(16.6)
1,64,233
-9.8
13,459
8.2
4,890
8,568
1,022
321
7,867
323
7,544
2,339
-717
21.5
5,923
6,176
-7.8
FY21E
29,50,546
(9.6)
1,58,017
-3.8
12,562
7.9
4,920
7,642
1,618
218
6,242
0
6,242
1,573
0
25.2
4,669
4,669
-24.4
(INR m)
FY22E
36,07,027
22.2
1,94,546
23.1
18,871
9.7
5,114
13,757
1,404
250
12,604
0
12,604
3,153
0
25.0
9,451
9,451
102.4
Standalone – Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Provisions & other CL
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
FY16
475
19,108
19,583
1,437
7,585
28,606
34,651
17,456
17,196
310
12,703
19,315
6,964
5,781
327
6,243
20,916
17,593
3,323
-1,602
28,606
FY17
475
23,608
24,083
1,257
11,072
36,413
39,290
19,451
19,839
623
15,880
22,705
9,670
7,238
85
5,713
22,634
19,169
3,465
71
36,412
FY18
475
28,329
28,804
1,482
11,892
42,178
45,454
21,736
23,719
1,311
20,355
26,177
9,644
9,684
109
6,741
29,385
28,227
1,158
-3,207
42,178
FY19
475
32,998
33,473
2,126
14,000
49,600
50,536
24,743
25,793
2,572
23,008
32,320
11,759
14,141
439
5,981
34,094
32,912
1,183
-1,774
49,600
0.0
FY20
475
35,706
36,181
1,581
20,219
57,981
58,077
29,077
28,999
2,854
28,554
33,204
10,389
12,814
4,193
5,808
35,631
33,869
1,763
-2,427
57,981
0.0
FY21E
475
38,375
38,850
1,581
20,219
60,649
64,931
33,998
30,933
1,000
31,054
30,837
9,996
12,122
2,430
6,289
33,175
31,413
1,763
-2,338
60,649
0.0
(INR m)
FY22E
475
45,539
46,014
1,581
17,219
64,814
71,431
39,111
32,320
1,000
33,254
37,520
12,307
14,924
3,332
6,957
39,280
37,518
1,763
-1,760
64,814
0.0
30 October 2020
9
 Motilal Oswal Financial Services
TVS Motor Company
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Growth (%)
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
EBITDA Margins (%)
Net Profit Margins (%)
RoE
RoCE
RoIC
Operating Ratios
Fixed Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Working Capital (Days)
Leverage Ratio (x)
Current Ratio
Debt/Equity
FY16
10.3
40.7
15.3
41.2
2.5
28.9
41.0
27.7
10.2
1.9
25.7
0.6
7.3
4.4
27.2
25.7
25.1
3.2
22.9
17
58
-6
0.9
0.4
FY17
11.7
14.1
17.8
50.7
2.5
25.6
35.9
23.7
8.3
1.7
24.7
0.6
7.1
4.6
25.6
23.8
23.3
3.1
29.1
20
58
0
1.0
0.5
FY18
13.9
18.7
21.1
60.6
3.3
28.4
30.3
20.0
7.0
1.4
18.1
0.8
7.7
4.4
25.1
24.7
27.9
3.3
23.2
23
68
-8
0.9
0.4
FY19
14.1
1.1
22.5
70.5
3.5
29.8
29.9
18.8
6.0
1.2
14.9
0.8
7.9
3.7
21.5
23.6
27.8
3.6
23.6
28
66
-4
0.9
0.4
FY20
13.0
-7.8
23.3
76.2
3.5
33.8
32.5
18.1
5.5
1.3
16.1
0.8
8.2
3.8
17.7
17.1
23.1
2.8
23.1
28
75
-15
0.9
0.6
FY21E
9.8
-24.4
20.2
81.8
3.5
42.8
43.0
20.9
5.2
1.4
17.4
0.8
7.9
3.0
12.4
13.6
17.2
2.4
23.1
28
73
-11
0.9
0.5
FY22E
19.9
102.4
30.7
96.9
4.0
24.2
21.2
13.8
4.4
1.1
11.4
0.9
9.7
4.9
22.3
22.9
33.4
2.7
23.1
28
70
-10
1.0
0.4
Standalone – Cash Flow Statement
Y/E March
NP/ (Loss) bef Tax and EO
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
Others
CF from Operations
(inc)/dec in FA
Free Cash Flow
CF from Investments
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
E: MOFSL Estimates
FY16
6,289
2,361
92
1,458
1,382
745
9,411
-4,887
4,524
-6,097
-461
-461
-2,065
-3,061
253
1,588
1,842
FY17
6,987
2,878
440
1,290
-514
-1,261
7,239
-6,123
1,117
-7,481
2,792
-433
-1,430
-727
-969
1,320
350
FY18
8,786
3,387
582
2,465
2,977
-294
12,973
-7,698
5,276
-11,314
1,917
-582
-1,887
-747
912
-2,288
-1,376
FY19
9,610
3,993
857
2,300
-1,097
-85
10,978
-7,334
3,643
-10,023
939
-857
-2,000
811
1,766
-1,376
390
FY20
7,544
4,890
1,022
1,850
2,926
-596
13,936
-7,267
6,669
-12,889
4,013
-1,003
-2,000
2,705
3,753
390
4,143
FY21E
6,242
4,920
1,618
1,573
-1,852
-218
9,137
-5,000
4,137
-7,282
0
-1,618
-2,000
-3,618
-1,763
4,193
2,430
(INR m)
FY22E
12,604
5,114
1,404
3,153
324
-250
16,042
-6,500
9,542
-8,450
-3,000
-1,404
-2,286
-6,690
902
2,430
3,332
30 October 2020
10
 Motilal Oswal Financial Services
TVS Motor Company
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products.
MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading
Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity &
Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository
Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory &
Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are available on the website
at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy
or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation
or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other
potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific
recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there
might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be
aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant
banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from
MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong
Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to
which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities,
products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong
Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable
state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together
with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment
services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to
"Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This
document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available
to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities
Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with
Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited.
("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in
respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of
which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly,
if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
30 October 2020
11
 Motilal Oswal Financial Services
TVS Motor Company
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients
which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may
not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of
MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The
information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of
warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared
solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients.
Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their
receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in
part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and
may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes
investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and
opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and
needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such
investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks
involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all
investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not
suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this
document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views
expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may
be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect or have effected an own account
transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit
investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient
should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or
developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is
being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in
part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or
other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement
within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this
document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be liable for
any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The
person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees
not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from
all losses, costs, damages,
expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West),
Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412.
AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS
(Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS
(Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS,
Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of
MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by
proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns.
Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID:
na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
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