ICICI Securities research report on TVS Motor Company
TVS Motor Company’s (TVSM) Q4FY20 operating performance was above consensus estimates (Adj. EBITDA margin at 7.5%) driven by tight control on other expenses (down 180bps QoQ). ASP’s rise (13.8%YoY/9.5% QoQ) to ~Rs 55k/unit continues to reflect strong product mix, higher export and BS-VI led price increases. FY20 is a true reflection of benefits of cost saving initiatives filtering through (EBITDA/vehicle expanded ~13% YoY to Rs4.1k) even as operating leverage remained a headwind (~17% YoY volume drop).
We expect EBITDA/vehicle to hit Rs5.6k in FY22, believe market share gains are likely via scooter revival in urban areas, rebound of moped due to rural improvement. Stock remains attractive at ~17x FY22 standalone EPS. We maintain BUY.
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