TVS Motor

The market was disappointed with the Q3FY16 performance of TVS Motor though it is not bad given the circumstances. The numbers were hit by Chennai floods and also the provision of bonus at this inopportune time, did deal a blow to the earnings. It had to provide for a one-time expense of Rs.7.5 crore towards the Chennai floods and over and above this, it provided Rs.11 crore towards retrospective amendment to Bonus Act. What also did not go in favor of the company was the lower realization despite higher volumes. Its two-wheeler sales grew 8% (YoY) at 6.76 lakh units during Q3 but realization was down over 3% (YoY) and 1.5% (QoQ) at Rs.41,760 per unit.

Net sales rose 11% (YoY) at Rs.2940 crore while EBITDA rose by a good 26% at Rs.202 crore. Doubling of other income helped though its effect was dulled by the finance cost which doubled to Rs.10 crore. The company ended the quarter with a 20% (YoY) rise in net profit at Rs.108 crore.

At this juncture, the market is not happy about the company’s decision to provide Hong Kong $10 million for setting up a wholly owned subsidiary in Hong Kong.