TVS Motor hits over 4-mth low; falls 6% in two days post February sales nos

The company reported a 15.4 per cent drop in its total sales at 253,261 units in February 2020.

Shares of TVS Motor Company were down 3 per cent to Rs 409 on the BSE on Tuesday, falling 6 per cent in the past two trading days after it reported a 15.4 per cent drop in its total sales at 253,261 units in February 2020. The two and three-wheeler manufacturer had sold a total of 299,353 units in February, 2019.

The stock was trading at its lowest level since October 17, 2019. In the past one month, it has underperformed the market by falling 13 per cent in line with auto index, as compared to 4 per cent decline in the S&P BSE Sensex.

The management said, as planned, the Company is on track to reducing dealer level BSIV stock in the domestic market and is confident of retailing it this month. In addition, the outbreak of pandemic Coronavirus (COVID-19) has led to impact on supply of certain components for production of BS-VI vehicles, it added.

Analysts at JP Morgan have ‘underweight’ rating on TVS Motor with December 2020 target price of Rs 400 per share.

“TVS has seen good product successes in Scooters in the recent past, however, the argument of market share gains is not playing out here in contrast to Street expectations. TVS has been disappointing on domestic prints over the last few months- this could be partly attributable to leaner channel inventory, BS6 transition ahead of peers, and continued rundown of mopeds (-21 per cent Y/Y),” the brokerage firm said in a company update.

The outlook for the first half of FY21 continues to remain challenging on account of BS VI transition. Further margin expansion would also depend on the ability of the company to pass on BS-VI price increase to the customers. However, the healthy monsoon and rabi season could provide some support, analysts at Cholamandalam Securities said in a result update.