January 25, 2017 / 15:43 IST
TVS Motor’s (TVSL) Q3FY17 performance was very strong as its average realization improved YoY despite adverse market situation. Company’s Revenue/EBIDTA/PAT grew by 3%/1.2%/6.7% YoY (down 12.9%/21%/25.2% QoQ) to Rs 29.8bn/2.2bn/1.33bn, as against our estimate of Rs 30.4bn/2.2bn/1.2bn in Q3FY17 respectively. Its volume growth was 2.3% YoY (down 11.7% QoQ) to 718,526 units, while average realization rose 0.7% YoY, due to batter product mix.
Outlook
We lower our volume, revenue, EBIDTA and PAT estimates for FY17E/FY18E factoring the near term slowdown amid demonetization. We introduce our FY19E EPS of Rs 23 on revenues of Rs 189bn. We roll forward our target price to FY19E EPS and raise our target price from Rs 425 to Rs 460, valuing the stock at 20xFY19E. Due to ongoing traction on volume across the segments, steady margin expansion and potential from upcoming BMW products, we reiterate our BUY on TVS. We see TVS as better place in domestic two wheeler industry with decent current product portfolio.
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