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Informist, Tuesday, Aug 6, 2024

--TVS Motor Apr-Jun net profit 5.77 bln rupees 

--TVS Motor Apr-Jun net profit 5.77 bln rupees vs 4.68 bln 

--TVS Motor Apr-Jun revenue 83.76 bln rupees vs 72.18 bln 

--TVS Motor: Apr-Jun operating EBITDA margin 11.5% vs 10.6% year ago 

--TVS Motor: Apr-Jun operating EBITDA 9.60 bln rupees, up 26% on year 

--TVS Motor: Expect robust sales in Jul-Sep led by rural recovery 

--TVS Motor: Faced challenges Apr-Jun due to Red Sea shipping crisis 

--TVS Motor: Hiked product prices in Jul-Sep, similar to Apr-Jun 

--TVS Motor: Some commodities' costs may rise slightly going forward 

--TVS Motor: See capex of 10-11 bln rupees for FY25
 

By Darshan Nakhwa

MUMBAI – TVS Motor Co Ltd reported strong growth in key earnings metrics for the June quarter on the back of 14% growth in sales volume, higher average selling price, and moderation in prices of raw materials. The Chennai-based company clocked a net profit of 5.77 bln rupees for Apr-Jun, 23.5% higher than a year ago.

The company's operating earnings before interest, tax, depreciation, and amortisation came in at 9.60 bln rupees, up 26% from 7.64 bln rupees a year ago. Its EBITDA margin expanded by 90 basis points on year to 11.5%, led by higher average selling price and cost savings. The company expects to sustain the margin in 2024-25 (Apr-Mar) with a richer product mix and cost reduction. 

TVS Motor hiked prices of its products by 0.2% in Apr-Jun, compared to a 0.5% increase in Jan-Mar. Even in the ongoing quarter, the company has hiked prices by 0.2%, the management said in a conference call held to discuss the company's financial performance.

Brokerage firms had projected TVS Motor's net profit at 5.78 bln rupees, EBITDA at 9.62 bln rupees, and EBITDA margin at 11.4% for the reporting quarter.

The two- and three-wheeler manufacturer reported strong growth in these metrics on the back of a healthy increase in its top line, which also outpaced the increase in expenses. The company's revenue from operations rose slightly over 16% on year to 83.76 bln rupees in Apr-Jun, below analysts' estimate of 84.17 bln rupees.

In Apr-Jun, TVS Motor's total expenses grew 14.5% on year to 76.29 bln rupees. Cost of material consumed--the biggest expense incurred by the company—-rose 10.4% on year to 59.41 bln rupees. TVS Motor saw some commodity inflation in Apr-Jun. However, the costs did not go up substantially. Going forward, the company expects marginal cost increases.

During the quarter, the company's other expenses surged nearly 38% on year to 9.56 bln rupees, and expenses related to employees grew 26.4% on year to 4.79 bln rupees. The employee-related expenses were driven by performance appraisals done during the quarter, the company's management said.

In the June quarter, the company sold a total of 1.09 mln units, marking growth of 14% on year and 2.3% sequentially. The sales growth was powered by higher despatches of two-wheelers on account of better rural demand as well as healthy growth in exports.

TVS Motor sold a total of 1.06 mln two-wheelers in the June quarter, representing growth of 15% on year and 2.3% sequentially. Its domestic sales were up nearly 15% on year and 4% on quarter to 828,323 units.

The company's two-wheeler exports grew 16% on year to 228,027 units. Sequentially, exports were down 3.3%. In Apr-Jun 2023, the company's exports were affected by macroeconomic uncertainty and currency depreciation in key international markets. 

The company faced challenges in despatching products to international markets in Apr-Jun owing to the Red Sea shipping crisis, TVS Motor's management said. However, it expects the situation to improve in Jul-Sep. Exports to select African markets were affected by currency devaluation and inflation. The company also faced challenges in Bangladesh.

In the two-wheeler category, the company reported healthy growth in despatches of both motorcycles and scooters in Apr-Jun. While motorcycle sales rose 11.2% on year and were flat sequentially at 514,438 units, scooter sales grew nearly 20% on year and 6% on quarter to 418,417 units. The company's electric scooter sales were up 34% on year and 5% sequentially at 51,936 units.
 

In contrast to the strong growth in two-wheeler despatches, the company's three-wheeler sales were down 5% on year but were up 16% on quarter at 35,206 units. 

On the sales outlook for Jul-Sep, TVS Motor's management said it expects robust growth in rural areas on account of a better-than-normal monsoon and government support programmes. 

TVS Motor has earmarked 10-11 bln rupees towards capital expenditure in 2024-25. The company's total investments are expected to be slightly higher than the capital expenditure.

Today, shares of the company closed 0.6% lower at 2,478.80 rupees on the National Stock Exchange. The company declared its earnings during market hours.  End

Edited by Rajeev Pai

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