TVS Motor surges 10% after posting highest-ever revenue, profit in Q3

TVS Motor Company's operating performance was driven by price hikes, a favorable mix, and lower other expenses, Motilal Oswal said in a report

Shares of TVS Motor Company rallied 10 per cent to hit a fresh 52-week high of Rs 582 on the BSE on Friday after the company posted a strong performance by reporting highest ever revenue and net profit for the quarter ended December 2020 (Q3FY21), on the back of healthy operational performance.

The company's net profit more-than-doubled at Rs 266 crore during the quarter, against Rs 121 crore in Q3 of last year. It reported highest-ever revenue of Rs 5,404 crore in Q3FY21 as against Rs 4,126 crore in Q3FY19, registering a growth of 31 per cent.
Ebitda (earnings before interest, taxes, depreciation, and amortisation) grew 41 per cent at Rs 511 crore, as compared to Rs 363 crore in the corresponding quarter of previous fiscal. Ebitda margins improved 66 basis points (bps) to 9.5 per cent in Q3FY21.

The company's management said that during the nine months (April-December) period, focused working capital management and improved operating performance helped the Company to generate free cash flow of Rs 1,616 crore. These proceeds are used to reduce the debt. Lean stocks with the dealers also helped to unleash the blocked working capital across the supply chain, it said.

TVS Motor Company’s operating performance was driven by price hikes, a favorable mix, and lower other expenses. Good volume recovery, price hikes, and a continued focus on cost management would support profitability, Motilal Oswal said in its report.

Urban retails are returning to pre-COVID levels, supporting the gradual uptick in the Scooter segment. Rural demand is buoyant with the highest rabi sowing. Stability in the major export regions is driving demand, supported by stable oil prices and currency availability. Core demand for Indian brands is increasing in these markets. However, container-related issues continue to affect exports, the brokerage firm said with ‘neutral’ rating on the stock.

Meanwhile, TVS Motor, in a press release said that the board has declared an interim dividend of Rs 2.10 per share (210 per cent) absorbing a sum of Rs 99.77 crore for the year 2020-21.

In the past three months, TVS Motor has outperformed the market by surging nearly 40 per cent, against 19 per cent rise in the S&P BSE Sensex. At 09:35 am, the stock was trading 8 per cent higher at Rs 571, as compared to 0.45 per cent rise in the benchmark index. A combined 6.5 million equity shares have changed hands on the NSE and BSE, so far.