TVS Motor rallies nearly 10% intraday post Q2 results; Sharekhan, Emkay maintain buy
The company has reported a margin of 10 per cent in Q2FY22 as against 9.3 per cent posted in Q2FY21.
TVS Motor Company Ltd rallied by about 10 per cent in morning trade on Friday, a day after it reported a 41.8 per cent YoY rise in standalone profits at Rs 278 crore for the second quarter ended September 30, 2021. It had posted a profit of Rs 196 crore in the year-ago quarter.
Zee Business analysts estimated a profit of Rs 282 crore for the period under review. The Chennai-headquartered company's revenue from operations grew 22% YoY to Rs 5,619 crore as against Rs 4,605 crore posted last year. EBITDA stood at Rs 562 crore, up 30.7% YoY, from Rs 430 crores.
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The company has reported a margin of 10 per cent in Q2FY22 as against 9.3 per cent posted in Q2FY21. The company has reported its highest-ever revenue and highest-ever EBITDA in Q2.
Besides, the board has approved the incorporation of a wholly-owned subsidiary to undertake its electric mobility business.
Reacting to the results, domestic brokerage firm, Sharekhan maintains a buy rating with a target price of Rs 688.
“TVS Motor (TVSM) reported better-than-expected operational performance in Q2FY22, while revenue growth remained in-line with our expectations. We continue to remain positive on TVS Motor and expect volumes and margins to remain robust going forward,” said the note.
The report further added that aggressive product launches, forays into new markets, and investments in newer and cleaner technologies would be the key growth drivers for the company.
Emkay Global maintains a buy rating on TVS Motor post Q2 results with a 12-month target price of Rs 800.
Q2 EBITDA margin expanded by 70bps on a year-on-year basis to 10 per cent, aided by the restoration of export incentives, higher spare-part sales and a one-time benefit (0.4% of revenues) relating to export incentives of the last two quarters.
The domestic 2W volume outlook is positive, and premium motorcycles/scooters could outperform ahead. In addition, the export outlook is encouraging, owing to healthy demand in Africa and Latin America regions. We expect 11% volume CAGR over FY22-24E.
The board approved the incorporation of a subsidiary to undertake the electric mobility business. It will invest Rs10bn on product development and capacity expansion. EV launches are targeted at segments such as premium scooters, high-performance sporty motorcycles, commuter space, delivery market and 3Ws.
“We increase FY22-24 EPS estimates by 1-3% on higher revenue assumptions. We expect robust revenue/earnings CAGRs of 13%/27% over FY22-24E. Retain Buy but raised target to Rs800 from Rs780 earlier, based on 24x Dec'23E EPS (25x Sep'23E earlier) and the value of TVS credit services at Rs26/share,” added the note.
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