TVS Motor Q1: Expect poor show on all counts, say analysts

TVS Motor , India's fourth largest two-wheeler company, is likely to disappoint investors on all counts in the first quarter of FY13. Analysts on an average expect profit after tax to decline by 22.6% year-on-year and 20.4% quarter-on-quarter to Rs 45.5 crore in the quarter ended June 2012.
 
Analysts expect weak earnings due to subdued volume growth and margin pressure during the quarter. They feel the company to report further slippage in operating performance after weak earnings in previous quarter. 

Revenues are seen going down by 7.5% YoY and 0.8% QoQ to Rs 1,614 crore and earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 21.3% YoY and 7% QoQ to Rs 92 crore in the quarter.

Operating profit marign has been declining quarter after quarter, which is seen falling by 100 basis points YoY and 30 basis points QoQ to 5.7% in the first quarter of FY13. It had posted margin at 6% in the March quarter, 6.5% in December quarter (2012), 6.9% in September quarter and 6.7% in last June quarter.

TVS Motor has been the worst performing company in two-wheeler sector for many quarters. Volumes in the quarter degrew by 3.2% as against peers like Hero Motocorp that reported volume growth of 7.4%.

All segments have slowed down expect Mopeds, which managed growth of 6% YoY.

The biggest worry is rising competition and loss of market share. In the June quarter, Honda Motors and Scooters (HMSL) surpassed TVS Motor to become the second largest player in Scooter segment. 

Overall market share has dipped to 14% and market share in the motorcycle segment has dwindled to 6%. 

Volumes - Q1FY13 YoY 

Total volumes went down by 3.2% year-on-year (and 2% quarter-on-quarter) to 5.19 lakh units while Hero Motocorp reported volume growth of 7.4% YoY.

Motorcycle's volumes fell by 10% to 1.93 lakh units and scooters slipped by 3.9% to 1.12 lakh units.

Three-wheeler volumes dropped by 20.5% to 9079 units and exports declined by 16% to 64839 units. However, Mopeds' volume rose by 6% to 2.03 lakh units.