TVS Motor hits fresh 52-week high ahead of Q3 results on Thursday

Shares of TVS Motor Company hit a fresh 52-week high of Rs 555, up 2 per cent, on the BSE on Wednesday ahead of its December quarter results (Q3FY21) on Thursday. The stock bounced back 4 per cent from its intra-day low of Rs 536.

The stock saw huge activities with trading volumes jumping over four-fold today. A combined around 7.4 million equity shares changing hands on the NSE and BSE till 12:10 pm. In comparison, the S&P BSE Sensex was down 1 per cent at 47,820 points, while the S&P BSE Auto index was down 0.16 per cent at 23,474 points on the BSE.

"The meeting of the board of directors of the company is scheduled on 28/01/2021 to consider and approve the unaudited financial results for the quarter ended 31st December 2020 and declaration of interim dividend, if any for the FY 2020-21," TVS Motor said in exchange filing.

In the past three months, stock of the two-wheeler company outperformed the market by surging 28 per cent, after it reported healthy operational performance in the July-September quarter of FY21 (Q2FY21). In Q2FY21, Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin improved by 50 basis points to 9.3 per cent from 8.8 per cent in Q2FY20 due to strong focus on cost reduction initiatives taken by the company.

For Q3FY21, TVS Motor had posted 23 per cent year on year (YoY) growth in two-wheelers (2Ws) sales at 9.52 lakh units as against sales of 7.73 lakh units in the third quarter FY19-20. Three-wheelers sales, however, declined 21 per cent YoY at 38,000 units as against 48,000 units in the corresponding quarter of previous fiscal.

"For Q3FY21, TVS Motor's revenues should rise YoY driven by a 20 per cent rise in volumes and 6 per cent increase in realizations. Volume growth has been supported by 2Ws in domestic and export segments. Despite better scale, benign currency and cost reduction efforts, EBITDA margin is likely to contract on adverse mix, higher input costs and loss of MEIS scheme export incentives," analysts at Emkay Global Financial Services said in result preview.

However, in FY22, analysts expects overall 2Ws volumes are expected to recover to FY20 levels of around 17.4 million units, implying 15 per cent growth over FY21. Student demand, which has been weak in FY21 YTD, is expected to pick up in FY22E. After a decline in Scooters' share in FY21 YTD to 29 per cent, it is expected to recover to 31 per cent in FY22E, driven by the recovery in urban demand.

For 3Ws, volume growth is expected to be strong at 70-90 per cent in FY22E. Strong recovery is expected in both Cargo and Passenger segments. Electric vehicles (EV) penetration is likely to gradually increase due to cost economics and subsidies, it said in sector update.