TVS Motor Q1 net slips lower-than-expected 13% to Rs 51 cr

Two-wheeler maker TVS Motor Co beat street expectations with a lower-than-expected 13% year-on-year decline in first quarter net profit at Rs 51 crore.

The India's fourth largest two-wheeler maker's revenue for the quarter rose 4% to Rs 1,820 crore.

Analysts on average had expected TVS Motor to report a net profit of Rs 46 crore on revenue of Rs 1,614 crore in April-June, according to CNBC-TV18 estimates.

"Profits are lower due to significant increase in brand investments across key brands including TVS Wego, TVS StaR City and TVS Sport along with the recently introduced Apache RTR and Scooty Pep," the company said on Friday.

TVS's total expenses in April-June rose 5% to Rs 1,743 crore.

TVS's total sales in the first quarter remained flat at 5.47 lakh units. Motorcycle sales slipped 8% to 2.06 lakh units and scooter sales were at 1.20 lakh units, up marginally from 1.19 units it sold in the year ago quarter. The company's three-wheeler sales also declined 23% to 9,367 units.

Sales at its overseas arm PT TVS Motor Indonesia also fell to 6,041 units from 7,035 units it sold in the year ago quarter. The company is expanding its dealer network to 200 by the end of this year from 110 in six provinces, which will enable a better reach, it said.

Back home in India, TVS Motor will launch an all new executive segment motorcycle in the second quarter and a new scooter later in the year, which it hopes will boost its sales volumes.

TVS Motor rose to a high of Rs 39.20 post the results. But by late afternoon, the stock had given up its gains and was down 1.5% at Rs 37.50 on NSE. 

"High investments in subsidiary and associate companies, continuous loss (at PAT level) in the Indonesian subsidiary and increased competition in the domestic business has built lot of pessimism around the performance of the company which we believe are unwarranted," said Ronak Sarda of Institutional Business Group, MSFL.

He has maintained a "buy" rating on TVS Motor, saying the current valuations are factoring in the worst given its decent product portfolio, new launches, exposure to growing export markets, in-house research & development support and larte distributorship.

Nachiket Kelkar
nachiket.kelkar@network18online.com