TVS Motor hits a new high

TVS Motor Company has hit a new 52-week high today at Rs.89.90 and it currently remains up around the same high levels.

The stock is up after the company announced that for the month of Feb’14, it recorded a 7% jump in total sales at 1,77,662 units. Sales of scooters grew by 37% to 41,990 units in February 2014 from 30,611 units sold during the same month of the previous year. Sales of motorcycles grew 3% at 62,762 units in February 2014 v/s 60,985 units sold during the same month of the previous year.

W.r.t to its Q3FY14 performance, tt has been a sluggish quarter for the entire two wheeler sector with delayed monsoons, high interest rates and the overall subdued sentiment affected. TVS Motor, for Q3FY13, registered total two wheeler sales of 5.03 lakh units against 5.19 lakh units, on YoY. Exports dropped 22%. Plus there was reduction in export incentives from 5.5% to 2%.  Consequently, the company ended the quarter with a net profit at Rs.52.45 crore, down 7% on YoY. This was despite a 2% rise in net sales at Rs.1780 crore.  The only consolation – at least this is better than a 405 drop it showed in Q2.

The good news is that it has begun 2013 on a better note. In January, the company recorded a marginal increase in total sales at 175,931 units v/s 173,514 units in January 2012. And this is 13% jump over the sales of December. Things are getting hot for the two-wheeler sector with competition heating up  and market shares are dwindling.  Unlike Bajaj and Hero, the company did not have new launches  but three-wheeler sales are doing better. The company plans to launch a new brand in Q4 – Phoenix and this is expected to have an increased ad spend. This could impact margins in Q4 if not supported by better sales.