18 March 2014
Update | Sector: Automobiles
TVS Motor
BSE Sensex
21,810
S&P CNX
6,504
CMP: INR87
TP: INR120
Buy
Signs of recovery in 2Ws; Share of Scooters rising
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
TVSL gaining share in Scooters; South recovery augurs well
TVSL IN
475.1
90/28
-2/159/123
41.0
0.7
Financial Snapshot (INR Million)
Y/E March
2014E 2015E 2016E
Net Sales
80,007 96,330110,661
EBITDA
Adj PAT
EPS (INR)
Growth (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
4,720 6,117
2,861 3,765
5.5
45.5
30.0
19.9
20.1
15.6
2.9
7.9
42.9
35.6
24.1
25.4
10.9
2.4
7,436
4,741
10.0
25.9
42.7
25.5
28.0
8.7
2.0
Our analysis of the state-wise and product segment-wise two-wheeler (2W) sales
for the last four years up to 3QFY14 indicates initial signs of demand recovery.
October-February sales grew 9.1% against 3.5%/3.2% in 1HFY14/FY13. The weak
performing South region too has stabilized, registering 2.9% growth in 3QFY14
against 10.3% decline in 1HFY14.
Scooter volumes grew 18%, outpacing Motorcycle volume growth across regions.
The share of Scooters has increased from 21.3% in FY13 to 23.7% in 9MFY14. Post
the launch of
Jupiter
in September 2013, TVSL’s market share in Scooters has
increased.
In non-South markets, growth in Moped volumes has remained strong at 18%. In
Uttar Pradesh, the largest non-South market for Mopeds, volumes grew 20%.
TVSL is the only company currently operating in the Mopeds segment in India.
Recovery in South markets augurs well for TVSL, which derives 56% of its volumes
from this region. Over the next 12-18 months, TVSL plans to launch multiple
products across segments to reinforce its product portfolio. We expect EPS to
grow at a CAGR of 34% over FY14-16. Maintain Buy, with a target price of INR120
(12x FY16E EPS).
Initial signs of recovery in 2Ws; North and East driving growth
Shareholding pattern (%)
As on
Promoter
Dom. Inst
Foreign
Others
Dec-13 Sep-13 Dec-12
57.4
17.7
3.7
21.2
57.4
18.3
2.9
21.4
57.4
18.1
2.3
22.2
Initial signs of demand recovery are evident in the domestic two-wheeler
(2W) industry. October-February sales have grown 9.1% v/s 3.5%/3.2% in
1HFY14/FY13.
The North (13.2% growth) and East (17.1% growth) have been the key
growth drivers during the period.
The South has been the weakest performer, with volume decline of 6.5%,
largely due to 19.4% decline in the largest market, Tamil Nadu.
However, signs of recovery are visible in the South as well, with marginal
growth of 2.9% in 3QFY14 (v/s 10.3% decline in 1HFY14)
Stock Performance (1-year)
Scooters outperform across regions; Jupiter helps TVSL gain share
Scooter volumes grew 18%, outpacing Motorcycle growth across regions.
The share of Scooters has risen from 21.3% in FY13 to 23.7% in 9MFY14.
Post the launch of Jupiter in September 2013 in the non-South markets,
TVSL has witnessed healthy improvement in its market share in Scooters.
Mopeds register 18% growth in non-South markets
Moped volumes declined 10.6% in 9MFY14 due to 31% decline in the
largest market, Tamil Nadu, which contributes 47% of volumes.
In non-South markets, growth in Moped volumes has remained strong at
18%. In Uttar Pradesh, the largest non-South market for Mopeds, volumes
grew 20%.
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 3982 5416
Chirag Jain
(Chirag.Jain@MotilalOswal.com); +91 22 3982 5418
Investors are advised to refer through disclosures made at the end of the Research Report.