TVS Motor Q2 revenues seen down 16% to Rs 1667 cr

India's fourth largest two-wheeler company TVS Motor will report the worst of the two-wheeler numbers in the three months period ended September 2012 due to big loss in market share, say analysts. Profit after tax is expected to fall by 44 percent year-on-year to Rs 42.8 crore in the quarter.

Revenues are seen going down by 16.2 percent to Rs 1,667 crore from Rs 1,991 crore during the same period. Sales volumes declined sharply in the quarter on account of stiff competition especially in the scooter and motorbike segment.

In scooters segment, Honda’s market share has risen from 48 percent in FY12 to 51 percent year-to-date, mainly at the expense of TVS Motor.

Earnings before interest, tax, depreciation and amortisation (EBITDA) is seen falling significantly to Rs 95 crore in the second quarter of FY13 from Rs 138 crore in the corresponding quarter of last fiscal.

Operating profit margin is likely to drop by 120 basis points YoY to 5.7 percent in the quarter due to lower volumes and operating leverage. Product mix has undergone a dramatic change with premium end motorcycles and 3-wheeler is currently accounting for only 11 percent of volumes in Q2FY13 as against 16 percent in Q2FY12.

Average selling price (ASP) rose 2 percent on account of price hike.

Investors should watch out for company's investment in subsidiaries.

The market share of company's (domestic) two-wheeler business has slipped from 15.1 percent in FY11 to 14.1 percent in FY12. Analysts forecasted that to drop to 12.6 percent in current financial year.

Volume growth YoY

TVS Motor's total volume fell by 19.6 percent YoY to 4.86 lakh units while its rivals Bajaj Auto reported a fall of 9.9 percent to 10.49 lakh units. Hero Motocorp's sales declined 13.7 percent to 13.32 lakh units in the quarter.

Two-wheeler sales went down 20 percent YoY to 4.73 lakh units while its three-wheeler slipped 4.5 percent to 12,213 units during the quarter. Exports fell sharply to 55,934 units from 84,499 units.