Sell TVS Motors; target of Rs 365: Prabhudas Lilladher

Prabhudas Lilladher's research report on TVS Motors

TVSL’s reported mixed set of results where revenues came in marginally lower at Rs14.3bn (-68% YoY, PLe Rs15b). Gross margins too came in lower at 24% (-90bp YoY/QoQ), PLe 27%). However, led by tight cost control, EBITDA loss restricted at Rs488m (PLe loss of Rs649m) while net loss at Rs1.4b (PLe loss of Rs1.3b). The management sounded optimistic on domestic sales outlook with demand back to normal at ~75% of its dealerships, while exports and domestic 3W portfolio to see near term challenges.

Outlook

TVSL is trading at an expensive valuation of 23x FY22 EPS (v/s HMCL and BJAUT trading range of 16-17x), which we believe factors in positives. Consequently, we maintain Sell price target at Rs365 at 17x Sep-22 core EPS at Rs320 (unchanged) and Rs45 for NBFC.

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