TVS Motors (Q3 FY14)

TVS Motors reported an in-line with estimates revenues of Rs20.6bn driven by 3.2% yoy volume growth and 10.8% jump in realizations. Volume growth was led by 9.3% and 49.7% yoy jump in scooter and three wheeler volumes respectively. Amongst markets, while exports saw a jump of 26.1% yoy, domestic sales registered a decline of 3.2%. Realization jump was on account of higher contribution of motorcycles and three wheelers in the product mix. Rupee depreciation also helped exports realizations.

Operating profit at Rs1.2bn and OPM at 6% was in line with our estimates. Margins were higher by 5bps on yoy basis and 11bps on sequential basis. On a yoy basis, savings on raw material cost was offset by higher staff costs and overheads (rising ad spends for new launches). Operating profit per vehicle was higher by 11.8% on yoy basis but declined 0.9% on sequential basis.

PAT at Rs688mn was lower than our expectations of Rs712mn owing to lower than expected other income and higher than estimated depreciation.