Credit Suisse sees 20% downside on TVS Motors, stock falls

Credit Suisse has initiated coverage on TVS Motor with an underperform rating. The brokerage firm has a target of Rs 260 per share, indicating 20 percent downside. It believes that street expectations of a 300 basis points margin improvement over the next two years are unlikely to be met.

April 26, 2016 / 18:45 IST

26 Aug, 2025 12:21

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Credit Suisse has initiated coverage on TVS Motor with an underperform rating. The brokerage firm has a target of Rs 260 per share, indicating 20 percent downside. It believes that TVS Motor is unlikely to meet street expectations of a 300 basis points margin improvement over the next two years.

Credit Suisse is not very upbeat on the two-wheeler sector. It feels that though a good monsoon and pick-up in the pace of the economic recovery augurs well for auto volumes, four-wheelers stand to benefit more. "Four-wheelers also have a much higher operating leverage once volumes bounce back," it states in a report.

According to Credit Suisse, pricing of two-wheeler may still remain under pressure as original equipment manufacturers (OEMs) continue to launch aggressively priced variants. "Product mix continues to move towards scooters which is a structurally lower margin product. A slowdown in higher-margin exports and expiry of excise/income tax exemptions are another headwind," it adds.

Meanwhile, TVS Motor's October-December quarter was not impressive hit by Chennai floods and bonus provision. Its Q3 profit rose 19.4 percent year-on-year to Rs 107.7 crore while revenue increased 11.4 percent to Rs 2,939.6 crore.