While the four-wheeler industry has been struggling, to some extent, two-wheeler companies have been doing much better. And this has been amply reflected in the performance of Chennia based TVS Motors. For Q3FY14, the company reported a 31% (YoY) rise in net profit at Rs.52 crore on a net revenue of Rs.2035 crore, a 13% rise. EBITDA was up 15% at Rs.123 crore while margins improved by 10 bps at 6%.

This good performance was backed by good two-wheeler sales wherein total two-wheeler sales rose marginally by 2%, motorcycles sales were better rising 5% though scooter sales fell 9%. Exports were robust which supported the growth in earnings, rising 22% while three-wheelers grew 52%. What also helped the earnings were the good monsoon and new product launches which have met with good market response. In terms of debt, last fiscal, the company divested stake in TVS Energy  and realized a profit of Rs.30 crore but more importantly, it meant the debt of Rs.260 crore on that company too has vanished. We can see the effect of this on the interest cost, which in current Q3 stands at Rs.5.32 crore v/s Rs.11.80 crore in Q3FY13. The company has interest bearing debt to the tune of Rs.240 crore and with cash of around rs.150 crore on hand, its net debt is actually around Rs.100 crore. Its aim of becoming a debt free company in FY15 seems most likely and that will only go on to add to the margins of the company. Its 9MFY14 net profit at Rs.209 crore has already sourpassed 12MFY13 net profit of Rs.116 crore. Clearly, it is a sure shot winner this fiscal.