Tvs Revs Up As Higher Sales Loom

Shares of the Chennai-based two-wheeler major TVS Motor Ltd edged up in late afternoon trades in a sliding market on fresh buying interest at lower levels fuelled by expectations of higher sales.

The stock closed 4 per cent higher at Rs 150.75 on the Bombay Stock Exchange (BSE), slightly off its intra-day peak of Rs 152.

The motorcycle, moped and scooter manufacturer notched up a 5 per cent rise in total vehicle sales in November 2001 to 79,492 vehicles.

While moped sales fell sharply, motorcycle sales recorded a surge on the back of the launch of a new 110 cc fully indigenous model, branded Victor.

Motorcycle sales increased by 27 per cent in November 2001 to 40,500, while moped sales fell 24 per cent to 23,693 units in November 2001.

Victor falls in the economy class with an on-road price of about Rs 41,000. The company hopes to sell around 70,000 units in FY 2002 and 2,00,000 units in FY 2002-03.

The company's joint collaborator, Suzuki Motor Corporation (SMC) of Japan, recently agreed to sell its entire shareholding of 25.97 per cent in the company to the TVS group at Rs 15 per share. As per the agreement reached by the two companies, SMC won't enter the Indian market with its own launches over the next 30 months.

During this period, TVS Motor can continue to use the Suzuki brand name on its older range of two-wheelers. The only restriction is that TVS cannot export two-wheelers with the Suzuki name or components.

After staging a smart recovery in the last few months on the back of rising motorcycle sales, the stock has been on to a roller-coaster ride of late. From its intra-day high of Rs 192 of 4 December 2001, the stock is off 21.3 per cent to the current Rs 151.

From a 52-week low of Rs 72.80, the stock is up 107 per cent. From a high of 1.85 lakh shares on 28 October 2001, volumes had fallen to less than 10,000 shares a day on a number of occasions.

Auto analysts, however, say that, unlike Hero Honda and Bajaj Auto, TVS is not a cash-rich company, hindering its ability to continuously launch new products.