Hold PVR; target of Rs 1017: Emkay Global Financial

Emkay Global Financial's report on PVR

OPM contracted 300bps yoy to 10.6% (est. 11.4%), impacted by a volume loss of 230,000 units during the lockdown, Rs1.1bn liquidation support to dealers for clearing BS4 stocks and provision for incentive loss of Rs570mn due to GST transition at the Neemrana plant. Considering the lockdown and expectation of gradual pickup in demand, we reduce FY21E volume by 17% to 4.8mn units, but raise FY22E volume by 2% to 6.5mn units. We expect recovery from H2FY21 on low base, pent-up demand and better rural sentiment. HMCL has been losing share in domestic 2Ws on increasing competition and the inability of new products to aid volumes in scooters and premium motorcycles. We expect market share losses to persist, with a decline from 36% in FY20 to 35% in FY22E.

Outlook

We expect a 6%/4% CAGR for revenue/earnings over FY20-22E. We retain a Hold rating, with a TP of Rs2,530 (Rs2,313 earlier), based on 14x FY22E EPS and value of Fincorp at Rs131/share. In sector EAP, we have an UW stance on the company.

PVR 13062020-emkay