28 May 2020
4QFY20 Results Update | Sector: Automobile
TVS Motor Company
Estimate changes
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
158.2 / 2
512 / 240
12/-10/-14
928
CMP: INR333
TP: INR310 (-7%)
Neutral
Below est.; Expect revival in 2H, Premium segment to outperform
BS6 cost inflation, discounts for liquidating BS4 stock hurt margins
TVSL’s operating performance was impacted by passing cost inflation in BS6
without the loading of margins as well as discounts offered on BS4 inventory
(60bp). The company expects volume recovery in 2HFY21 in both Domestic and
Exports, with the Premium portfolio expected to outperform.
We cut our FY20/21 EPS by 26%/8% to factor volume weakness. Maintain
Neutral
with TP of INR310 (~18x Mar’22 EPS + INR36 for NBFC).
4QFY20 revenue / EBITDA / adj. PAT declined 21%/21%/28% YoY to
~INR34.8b/INR0.9b/INR1.8b. FY20 revenues/EBITDA/PAT fell 10%/6%/8%.
Volumes declined ~30% YoY (-23% QoQ). Realizations grew ~13.7% YoY (+9.5%
QoQ) to INR55k (est.: INR52.1k), driven by passing BS6 cost.
Gross margins declined 280 QoQ (+160bp YoY) to 25% (est.: 27.7%), impacted
by discount of INR220m (~60bp) to liquidate BS4 inventory as well as passing
BS6 cost inflation without the loading of margins.
As a result, EBITDA margins declined 180bp QoQ (-10bp YoY) to 7% (est.: 8%)
due to reduced fixed cost. Adj. PAT declined 28% YoY (-45% QoQ) to ~INR1b
(est.: ~INR0.9b), supported by high other income (boosted by one-time interest
on income tax refund).
FY21 outlook:
The management is cautiously optimistic about recovery in
2HFY21. It expects premium products (Apache and Ntorq) to do better than
other segments. It expects TVSL to outperform the industry.
Status of operations:
Plants resumed manufacturing from 5
th
May, and
currently, over 70% of dealerships have re-started operations.
Price hike:
The company witnessed a price increase of 10–12% for a BS6-
related cost increase and took another ~1% price increase in Apr’20.
Financing:
It expects to increase retail finance penetration due to the BS6 price
hike and aid demand. Currently, 56% of Domestic 2W is financed, and TVS
Credit’s share is at 46%. Apart from TVS Credit, other major financiers for TVSL
are Sriram Capital, HDFC Bank, and Sundaram Finance.
Indonesian sub achieves positive operating PBT in 2HFY20:
FY20 volumes
grew ~31.6% (to ~53.6k) for 2Ws and 201% (to 8.1k) for 3Ws. FY20 EBITDA was
USD0.5m (v/s EBITDA loss of USD3m in FY19). 2HFY20 achieved positive
operating PBT.
Capex:
FY21 guidance is at ~INR3b (v/s ~INR7.2b in FY20). Investments, over
and above this, are yet to be finalized.
We cut our FY20/FY21 EPS by 26%/8% to INR8.5/INR15.2 to reflect weak
volumes in 1HFY21.
Valuations at 39.1x/21.9x FY21E/FY22E EPS are already reflecting a large part
of the earnings recovery. Maintain
Neutral
with TP of ~INR310.
Financials & Valuations (INR b)
FY20 FY21E FY22E
Y/E March
Sales
164.2 149.5 177.2
EBITDA
13.5
12.0
16.5
Adj. PAT
5.7
4.0
7.2
EPS (INR)
11.9
8.5
15.2
EPS Gr. (%)
-15.4 -28.9
79.2
BV/Sh (INR)
76.2
80.4
90.8
Ratios
RoE (%)
16.3
10.8
17.7
RoCE (%)
17.2
11.7
18.4
Payout (%)
30.5
49.7
31.7
Valuations
P/E (x)
27.9
39.3
21.9
P/BV (x)
4.4
4.1
3.7
Div. Yield (%)
1.1
1.1
1.2
FCF Yield (%)
4.2
3.7
5.0
Shareholding pattern (%)
As On
Mar-20 Dec-19 Mar-19
Promoter
57.4
57.4
57.4
DII
21.2
20.4
15.8
FII
11.4
12.2
15.9
Others
10.0
10.0
10.9
FII Includes depository receipts
Miss on op. performance, higher other income, lower tax boost PAT
Highlights from management commentary
Valuation and view
Jinesh Gandhi – Research Analyst
(Jinesh@MotilalOswal.com); +91 22 6129 1524
Vipul Agrawal – Research Analyst
(Vipul.Agrawal@MotilalOswal.com); +91 22 7193 4337
3 September
research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P
1
Motilal Oswal
2019
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)
Vols ('000 units)
Growth (%)
Realn (INR '000/unit)
Growth (%)
Net Sales
Growth (%)
EBITDA
EBITDA Margin(%)
Interest
Depreciation
Other Income
PBT before EO Exp
EO Exp
PBT after EO Exp
Tax rate (%)
Adjusted PAT
Growth (%)
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
928.3
15.7
12.9
44.9
6.0
75.9
5.7
10.7
24.1
7.8
5.5
1Q
928.3
15.7
44.9
6.0
41,710
22.7
3,238
7.8
180
933
26
2,150
0
2,150
30.6
1,492
15.2
(INR m)
FY20
4QE
632.9
-81.7
52.1
19.0
32,987
(24.8)
2,632
8.0
228
1,265
32
1,172
0
1,172
23.1
900
(34.5)
FY19
2Q
1,088.4
14.7
45.9
7.1
49,935
22.8
4,282
8.6
212
1,016
7
3,062
0
3,062
31.0
2,113
(0.9)
3Q
989.8
19.8
47.1
5.3
46,640
26.1
3,757
8.1
167
1,012
7
2,585
0
2,585
31.0
1,784
15.6
4Q
907.3
2.0
48.4
7.3
43,876
9.5
3,117
7.1
247
1,031
36
1,875
0
1,875
26.7
1,374
(17.0)
1Q
923.2
-0.5
48.4
7.7
44,686
7.1
3,558
8.0
291
1,194
12
2,085
0
2,085
31.8
1,423
(4.6)
FY20
2Q
3Q
885.8
821.5
-18.6
-17.0
49.1
50.2
7.0
6.6
43,478 41,255
(12.9)
(11.5)
3,820
3,633
8.8
8.8
285
211
1,241
1,213
49
9
2,343
2,218
-760
760
3,103
1,457
17.8
16.9
1,953
1,808
(7.6)
1.3
4Q
632.9
-30.2
55.0
13.7
34,814
(20.7)
2,449
7.0
235
1,243
251
1,222
323
898
17.8
993
(27.8)
FY19
3,915.0
13.0
46.5
6.2
182,099
20.0
14,333
7.9
806
3,993
75
9,610
9,610
30.3
6,701
1.1
FY20
3,263.5
-16.6
50.3
8.2
164,233
(9.8)
13,459
8.2
1,022
4,890
321
7,867
323
7,544
21.5
6,176
(7.8)
FY19
2Q
1,088.4
14.7
15.0
45.9
7.1
75.8
4.9
10.7
24.2
8.6
6.5
3Q
989.8
19.8
16.3
47.1
5.3
75.8
5.1
11.1
24.2
8.1
5.9
4Q
907.3
2.0
15
48.4
7.3
76.6
4.6
11.7
23.4
7.1
4.8
1Q
923.2
-0.5
14.2
48.4
7.7
75.1
5.6
11.3
24.9
8.0
5.3
FY20
2Q
885.8
-18.6
14.3
49.1
7.0
73.4
5.4
12.5
26.6
8.8
5.9
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
-30.2
14.3
55.0
13.7
75.0
6.4
11.6
25.0
7.0
3.5
FY19
3,915.0
13.0
14.8
46.5
6.2
76.0
5.1
11.0
24.0
7.9
5.7
(INR m)
FY20
FY20
4QE
3,263.5
-16.6
14.3
50.3
8.2
73.9
5.7
12.2
26.1
8.2
5.2
632.9
-81.7
14.8
52.1
19.0
72.3
6.6
13.1
27.7
8.0
6.5
Exhibit 1: Trend in volumes and volume growth
Volumes ('000 units)
32.0
12.2 16.3 15.0
15.7 14.7
19.8
2.0
(0.5)
(17.0)
(18.6)
(30.2)
Growth (%)
Exhibit 2: Trend in blended realizations
Realizations (INR '000/unit)
2.0
Source: Company, MOFSL
Source: Company, MOFSL
28 May 2020
2
 Motilal Oswal Financial Services
TVS Motor Company
Exhibit 3: Motorcycle, Scooter, and overall market share trend
Motorcycles
25
20
15
10
5
0
Scooters
Overall
Source: Company, MOFSL
Exhibit 4: Net sales and growth trends
Net sales (INR b)
40.9
18.0 18.6
3.0 1.7
24.0
22.7 22.8 26.1
9.5 7.1
(11.5)
(12.9)
Growth (%)
Exhibit 5: Contribution of different segments to volume mix
Motorcycles
2
33
33
32
Scooters
Mopeds
4
22
36
38
5
24
4
19
32
45
3Ws
5
19
38
39
2
25
32
41
3
24
35
39
3
26
3
26
31
39
4
23
31
42
4
22
36
39
6
20
34
40
7
23
26
44
33
38
30
41
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 6: EBITDA and EBITDA margin trend
EBITDA (INR m)
8.9
5.7 6.2
8.1
7.4 7.8
8.6
7.1
EBITDA margin (%)
8.1 8.0
8.8
8.8
7.0
Exhibit 7: PAT and its growth trajectory
PAT
30.6
20.2
16.4
15.2
(0.9)
Growth (%)
15.6
(4.6) (7.6) 1.3
(17.0)
(27.8)
6.1
(6.8)
Source: Company, MOFSL
Source: Company, MOFSL
Key takeaways from earnings call
FY21 outlook:
The management expects consolidation in 2Q, driven by the rural
markets, and is cautiously optimistic of recovery in 2HFY21. It expects premium
products (Apache and Ntorq) to do better than other segments, and expects
these products to outperform the industry. In Nigeria, the company expects no
impact on demand if oil prices are above USD40/bbl (currently USD32/bbl).
Status of operations:
Plants resumed manufacturing from 5
th
May and currently,
over 70% of dealerships have re-started operations.
Discounts:
~INR220m was put toward a one-time additional discount to dealers
to liquidate BSIV vehicles, netted off from net revenues.
3
28 May 2020
 Motilal Oswal Financial Services
TVS Motor Company
BS6 model feedback:
BS6 accounted for 85% of Wholesale in 4QFY20 and ~120k
in Retail. Initial feedback has been positive, with 15% higher fuel efficiencies.
Financing:
It expects to increase retail finance penetration due to the BS6 price
hike and aid demand. Currently, 56% of its Domestic 2W is financed, and TVS
Credit’s share is at 46%. Apart from TVS Credit, other major financiers for TVSL
are Sriram Capital, HDFC Bank, and Sundaram Finance.
TVS Credit Services:
The FY20 book size stood at INR92.1b and net worth at
~INR13.7b. PAT was ~INR1.5b (2% of growth). NPAs are stable at 2.4% and CAR is
higher than the RBI requirement. 37% of its customers have opted for
moratorium.
Price hike:
The company witnessed a price increase of 10–12% for a BS6-related
cost increase and took another ~1% price increase in Apr’20.
Indonesian subsidiary achieves positive operating PBT
in 2HFY20: FY20 volumes
grew ~31.6% (to ~53.6k) for 2Ws and 201% (to 8.1k) for 3Ws. FY20 EBITDA was
USD0.5m (v/s EBITDA loss of USD3m in FY19). 2HFY20 achieved positive operating
PBT.
Capex:
FY21 guidance was at ~INR3b (v/s ~INR7.2b in FY20). Investments are to
be finalized over and above this.
Norton Motorcycles acquisition:
The company has acquired only assets and no
liabilities. Further details would be shared post the finalization of business plans.
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
COVID-19 impact. 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 by 17.4% in FY21E and grow 16.6% in FY22E.
Volume outperformance, market share gains to slow:
We estimate TVSL’s
volume outperformance over the Domestic 2W industry to slow as the gap in the
product portfolio is largely plugged. This is reflected in FY20, when TVSL actually
lost market share in Domestic 2W 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’s market share gains.
Scale to drive 110bp margin expansion over FY20–22E:
There are several levers
to improve margins, such as: 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 110bp (FY20–22E) to 9.3% by FY22E.
This would result in a standalone EPS CAGR of ~13% over FY20–22E.
NBFC arm plays major role as subsidiary to boost consolidated performance:
TVS Credit Services, an ~85% subsidiary, is a fast-growing NBFC company, with a
presence in financing for 2Ws, used cars, tractors, and so forth. The Captive NBFC
arm has been particularly helpful in offsetting the impact of the liquidity crunch in
the last 18 months. We value this NBFC company at ~INR36/share (post 20%
holdco discount).
28 May 2020
4
 Motilal Oswal Financial Services
TVS Motor Company
Valuation and view:
We expect subdued volumes in 1HFY21 due to 12–15% cost
inflation for BS6 compliance as well as the COVID-19 impact, with recovery
expected, at the earliest, around the festive season. 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 Scooter as we expect it to be cannibalized by E-Scooter. We cut our
FY20/FY21 EPS by 26%/8% to INR8.5/INR15.2 to build in volume decline due to
lockdown and uncertainty surrounding market recovery. Maintain
Neutral
with
TP of INR310 (18x Mar’22 EPS + INR36/share for value in NBFC).
Exhibit 8: Revised estimates
(INR m)
Volumes (m units)
Net Sales
EBITDA
EBITDA (%)
Net Profit
EPS (INR)
Rev
2.70
149,531
11,963
8.0
4,028
8.5
FY21E
Old
2.94
160,271
13,783
8.6
5,468
11.5
Chg (%)
-8.3
-6.7
-13.2
-60bp
-26.3
-26.3
Rev
3.14
177,161
16,476
9.3
7,217
15.2
FY22E
Old
3.33
184,245
17,319
9.4
7,870
16.6
Chg (%)
-5.6
-3.8
-4.9
-10bp
-8.3
-8.3
Source: MOFSL
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
FY15
26,360
55
6.7
1.1
292
3,920
7.5
FY16
39,540
50
7.3
1.3
507
5,410
9.4
FY17
50,000
26
7.2
1.7
870
6,980
12.5
FY18
61,540
23
6.9
2.2
1,380
8,920
15.5
1
FY19
83,350
35
7.0
1.8
1,480
11,900
12.4
1
11,900
84.27
FY20
92,150
11
6.7
1.6
1,510
13,720
11.0
1
13,720
84.27
FY21E
FY22E
92,150 115,188
0.0
25.0
5.3
5.6
1.2
1.4
1,106
1,613
17,326
20,438
6.4
7.9
1
1.25
17,326
25,548
84.27
84.27
11680
17223
25
36
Source: Company, MOFSL
Exhibit 10: P/E band
P/E (x)
Min (x)
60.0
45.0
30.0
15.0
0.0
Avg (x)
+1SD
Max (x)
-1SD
54.8
Exhibit 11: P/BV band
P/B (x)
Min (x)
12.0
9.0
6.0
7.5
4.8
2.1
1.0
0.0
4.1
Avg (x)
+1SD
Max (x)
-1SD
11.3
39.3
25.0
34.7
10.7
4.9
3.0
Source: MOFSL
Source: MOFSL
28 May 2020
5
 Motilal Oswal Financial Services
TVS Motor Company
Story in charts
Exhibit 12: Volume growth trajectory
22.4
Volumes (units)
18.6
5.4
Growth (%)
13.0
16.6
26.1
Exhibit 13: Revenue growth trend
Net sales (INR m)
25.1
20.0
10.6
9.3
18.5
Growth (%)
9.1
-17.4
-16.6
FY15
FY16
FY17
FY18
FY19
FY20E FY21E FY22E
Source: Company, MOFSL
FY15
FY16
FY17
FY18
FY19
-9.8 -9.0
FY20
FY21E FY22E
Source: Company, MOFSL
Exhibit 14: EBITDA margins trending upwards
EBITDA (INR m)
7.3
6.0
7.1
7.7
7.9
EBITDA margin (%)
8.2
8.0
9.3
Exhibit 15: Trend in PAT and PAT growth
PAT (INR m)
40.7
14.1
18.7
1.1
(15.4)
(28.9)
Growth (%)
79.2
33.4
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 m)
Capex (INR m)
FCF (INR m)
Exhibit 17: Sharp improvement in return ratios
RoCE (%)
RoE (%)
27.2
22.7
25.6
25.1
21.5
16.3
17.7
10.8
17.2
11.7
18.4
21.9
-3,669 -4,887
FY15
FY16
-3,000
-6,123 -7,698 -7,334
-6,500
-7,267
FY17 FY18 FY19 FY20 FY21E FY22E
Source: Company, MOFSL
FY15
25.7
23.8
24.5
23.5
FY16
FY17
FY18
FY19
FY20
FY21E FY22E
Source: Company, MOFSL
28 May 2020
6
 Motilal Oswal Financial Services
TVS Motor Company
Key operating metrics
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
1,016,807
6.2
38.0
812,527
15.0
30.3
738,547
-3.5
27.6
2,567,881
5.7
95.9
110,821
-1.8
4.1
2,224,902
4.8
83.1
453,800
8.3
16.9
2,678,702
5.4
41,455
4.9
111,047
10.6
FY17
1,067,803
5.0
36.5
870,863
7.2
29.8
910,519
23.3
31.1
2,853,885
11.1
97.6
69,254
-37.5
2.4
2,502,050
12.5
85.6
421,089
-7.2
14.4
2,923,139
9.1
41,515
0.1
121,353
9.3
FY18
1,329,105
24.5
38.3
1,134,918
30.3
32.7
876,932
-3.7
25.3
3,367,426
18.0
97.2
98,684
42.5
2.8
2,891,895
15.6
83.4
574,215
36.4
16.6
3,466,110
18.6
43,782
5.5
151,754
25.1
FY19
1,539,226
15.8
39.3
1,301,115
14.6
33.2
896,917
2.3
22.9
3,758,551
11.6
96.0
156,434
58.5
4.0
3,153,247
9.0
80.5
761,738
32.7
19.5
3,914,985
13.0
46,513
6.2
182,099
20.0
FY20
1,344,416
-12.7
41.2
1,075,219
-17.4
32.9
650,759
-27.4
19.9
3,089,557
-17.8
94.7
173,911
11.2
5.3
2,422,650
-23.2
74.2
840,818
10.4
25.8
3,263,468
-16.6
50,325
8.2
164,233
-9.8
FY21E
1,088,741
-19.0
40.4
918,696
-14.6
34.1
520,607
-20.0
19.3
2,542,417
-17.7
94.3
153,280
-11.9
5.7
1,981,771
-18.2
73.5
713,927
-15.1
26.5
2,695,698
-17.4
55,470
10.2
149,531
-9.0
FY22E
1,302,039
19.6
41.4
1,093,230
19.0
34.8
556,799
7.0
17.7
2,967,878
16.7
94.4
175,413
14.4
5.6
2,314,295
16.8
73.6
828,996
16.1
26.4
3,143,291
16.6
56,362
1.6
177,161
18.5
28 May 2020
7
 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 (%)
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
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
FY16
2,678,702
6.4
111,047
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
2,923,139
9.1
121,353
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
3,466,110
18.6
151,754
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
3,914,985
13.0
182,099
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
3,263,468
(16.6)
164,233
-9.8
13,459
8.2
4,890
8,568
1,022
321
7,867
-323
8,191
2,339
-717
19.8
6,569
5,669
-15.4
FY21E
2,695,698
(17.4)
149,531
-9.0
11,963
8.0
5,443
6,519
1,284
133
5,369
0
5,369
1,341
0
25.0
4,028
4,028
-28.9
(INR m)
FY22E
3,143,291
16.6
177,161
18.5
16,476
9.3
5,806
10,670
1,186
146
9,630
0
9,630
2,413
0
25.1
7,217
7,217
79.2
(INR m)
FY22E
475
42,664
43,139
1,581
16,746
61,466
69,987
40,883
29,104
1,000
30,759
37,451
11,207
13,590
3,723
8,930
36,848
35,085
1,763
603
61,466
0.0
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
12,432
42,718
45,454
21,736
23,719
1,311
20,355
26,177
9,644
9,684
109
6,741
29,077
25,762
3,315
-2,900
42,485
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
19,746
57,508
60,222
29,634
30,588
1,266
26,059
35,699
10,389
12,814
4,192
8,305
36,104
34,341
1,763
-405
57,508
0.0
FY21E
475
37,734
38,209
1,581
19,746
59,535
63,487
35,077
28,411
1,000
28,559
33,796
9,459
11,471
4,359
8,507
32,230
30,468
1,763
1,566
59,535
0.0
28 May 2020
8
 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
Standalone – Cash flow statement
Y/E March
NP/ (Loss) bef Tax and EO
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(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
10.3
40.7
15.3
41.2
2.5
28.9
32.3
21.8
8.1
1.5
20.4
0.8
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
28.3
18.7
6.6
1.4
19.7
0.8
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
23.9
15.8
5.5
1.1
14.5
1.0
7.7
4.4
25.1
24.5
27.7
3.3
23.2
23
62
-7
0.9
0.4
FY19
14.1
1.1
22.5
70.5
3.5
29.8
23.6
14.8
4.7
0.9
12.0
1.1
7.9
3.7
21.5
23.5
27.6
3.6
23.6
28
66
-4
0.9
0.4
FY20
11.9
-15.4
22.2
76.2
3.5
30.5
27.9
15.0
4.4
1.1
12.9
1.1
8.2
3.5
16.3
17.2
20.3
2.7
23.1
28
76
-10
1.0
0.5
FY21E
8.5
-28.9
19.9
80.4
3.5
49.7
39.3
16.7
4.1
1.2
14.5
1.1
8.0
2.7
10.8
11.7
14.6
2.4
23.1
28
74
-7
1.0
0.5
FY22E
15.2
79.2
27.4
90.8
4.0
31.7
21.9
12.1
3.7
1.0
10.4
1.2
9.3
4.1
17.7
18.4
26.5
2.5
23.1
28
72
-6
1.0
0.4
(INR m)
FY22E
9,630
5,806
1,186
2,413
327
14,536
-146
14,390
-6,500
7,890
-8,554
-3,000
-1,186
-2,286
-6,472
-636
4,359
3,723
FY16
6,289
2,361
92
1,458
1,382
8,666
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
8,500
-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
13,268
-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
11,063
-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
14,532
-596
13,936
-7,267
6,669
-12,889
4,013
-1,003
-2,000
2,705
3,753
390
4,143
FY21E
5,369
5,443
1,284
1,341
-1,804
8,951
-133
8,818
-3,000
5,818
-5,367
0
-1,284
-2,000
-3,284
167
4,192
4,359
28 May 2020
9
 Motilal Oswal Financial Services
TVS Motor Company
NOTES
28 May 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
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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
********************************************************************************************************************************
28 May 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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