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27 October 2015
2QFY16 Results Update | Sector: Automobiles
TVS Motor Company
Jinesh Gandhi ([email protected]); +91 22 3982 5416
Jay Shah ([email protected]); +91 22 3078 4701
BSE SENSEX S&P CNX CMP: INR276 TP: INR326 (+18%) Buy 27,253 8,233
Bloomberg TVSL IN
Equity Shares (m) 475.1
M.Cap. (INR b) / (USD b) 119.5/1.9
52-Week Range (INR) 322 / 201 1, 6, 12 Rel. Per (%) 12/16/6 12M Avg Val (INR M) 640 Free float (%) 42.6
Financials & Valuation (INR Billion)
Y/E Mar 2015 2016E 2017E
Net Sales 101.0 115.3 145.2 EBITDA 6.0 8.2 12.3 Adj PAT 3.5 4.6 7.6 EPS (INR) 7.3 9.7 16.0 Gr.(%) 33.4 33.0 64.7 BV/Sh.(INR) 34.6 41.7 54.7 RoE (%) 22.7 25.5 33.3 RoCE (%) 21.9 24.3 32.7 P/E (x) 37.7 28.4 17.2 P/BV (x) 8.0 6.6 5.0
Estimate change 6%
TP change
Rating change
RM cost saving leads to positive surprise, drives margin improvement Realizations improve ~7% YoY: Net sales grew 7.4% YoY (+10% QoQ) to
INR28.8b (in line with est.), driven by realizations—up ~7% YoY and 3.3% QoQ to ~INR42,431 (v/s est. INR41,694); volumes were flat YoY (+6.4% QoQ).
EBITDA margin at 7.4%: EBITDA at ~INR2.2b (v/s est. ~INR1.8b) grew 30% YoY/QoQ. EBITDA margin at 7.4%, up 130bp YoY (+120bp QoQ, v/s est. 6.5%), was driven by lower commodity cost. Adj. PAT grew ~23% YoY (+29% QoQ) to ~INR1.2b (v/s est. ~INR1b).
Earnings call highlights: a) TVSL targets 15% market share in domestic 2W business by FY16-end and 27% market share in 3W exports, b) new product offerings (Victor and new Apache) on track for 4QFY16 launch, c) strong growth in Jupiter led to the postponement of new launches, d) new moped launched in UP, with pan-India launch in three months, e) TVS-BMW alliance product launch in FY17 (both for TVS as well as BMW), f) some benefit of soft commodity prices might come in 2HFY16, g) part benefit of favorable forex passed on to distributors in exports, h) TVSL has made an investment of INR267m in an Indonesian subsidiary and INR250m in TVS Motor Services.
Valuation and view: We raise our FY16E EPS by 6% to ~INR9.7, but retain FY17E EPS, to factor in for EBITDA margin expansion in FY16 on account of lower commodity cost benefit. Our estimates are yet to factor in for BMW alliance. TVSL trades at 28.4x/17.2x FY16E/17E EPS. We value TVSL at ~18x FY17E EPS for core business and now add INR37 per share (~12.5x FY17E EPS of INR3 for TVS-BMW alliance). Maintain Buy with a target price of INR326.
S/A Quarterly Performance (INR Million)Y/E March (INR m) Est Var.
1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE FY15 FY16E 2QE (%)Volumes (units) 584,113 676,139 655,128 602,926 638,115 678,922 699,261 704,832 2,518,306 2,720,957 678,749 0.0
Growth (%) 22.8 34.7 22.9 6.7 9.2 0.4 6.7 16.9 21.3 8.0 0Realization (INR/unit) 39,468 39,682 40,495 40,749 41,078 42,431 42,643 43,211 40,099 42,373 41,694 1.8
Growth (%) 6.7 0.2 4.9 6.6 4.1 6.9 5.3 6.0 4.5 5.7 5Net Sales 23,054 26,831 26,529 24,569 26,212 28,807 29,819 30,457 100,982 115,295 28,300 1.8
Growth (%) 31.0 34.9 28.9 13.8 13.7 7.4 12.4 24.0 26.8 14.2 5RM (% of sa les ) 72.7 73.1 73.1 70.1 72.0 71.3 71.2 71.3 72.3 71.5 72.2 -90bpEmp cost (% of sa les ) 6.1 5.8 5.8 5.5 5.9 5.8 5.3 5.7 5.8 5.8 5.5 30bpOther exp (% of sa les ) 15.5 15.1 15.1 18.3 15.8 15.6 15.5 15.8 16.0 15.7 15.8 -20bp
EBITDA 1,312 1,627 1,602 1,502 1,637 2,119 2,247 2,183 6,043 8,186 1,843 15.0EBITDA margin (%) 5.7 6.1 6.0 6.1 6.2 7.4 7.5 7.2 6.0 7.1 6.5 80bp
Interest 60 35 53 127 130 102 110 111 274 453 125 -18.7Depreciation 336 366 371 461 422 466 471 498 1,533 1,857 427 9.1Other Income 89 86 59 92 96 57 85 137 326 375 95 -39.7PBT after EO Exp 1005 1313 1237 1007 1181 1609 1751 1710 4,562 6,251 1,386 16.1
Tax rate (%) 28.0 27.8 27.1 10.1 23.5 27.7 26.0 26.1 23.7 26.0 25 270bpReported PAT 723 948 902 905 903 1,164 1,296 1,263 3,478 4,626 1,039 12.0Adjusted PAT 723 948 902 905 903 1,164 1,296 1,263 3,478 4,626 1,039 12.0
Growth (%) 39.4 61.9 31.1 6.2 24.8 22.8 43.7 39.6 26.8 33.0 9.6
FY15 FY16
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
27 October 2015 2
TVS Motor Company
Realization improve ~7% YoY Net sales grew ~7% YoY (10% QoQ) to INR28.8b (in-line with est.) driven by
realizations up ~7% YoY (3.3% QoQ) to ~INR42,431 (v/s est. INR41,694). Whereas volumes were flat YoY (+6.4% QoQ). Scooters grew by 12% YoY,
motorcycles flat YoY and mopeds de-grew by ~13% YoY. 3Ws grew by ~18% YoY.
Exhibit 1: Flat volume growth….
Source: Company, MOSL
Exhibit 2: …. due to 13% YoY decline in Mopeds
Source: Company, MOSL
Exhibit 3: Sequential change in mix in favor of motorcycles
Source: Company, MOSL
Exhibit 4: Robust ~7% YoY growth in net sales
Source: Company, MOSL
Lower commodity cost benefit drives EBITDA margins to 7.4% (v/s est 6.5%) EBITDA grew 30.2% YoY (29.5% QoQ) to ~INR2.1b (v/s est. INR1.8b). Reported EBITDA margins were up 130bp YoY, (up 120bp QoQ) to 7.4% (v/s est
6.5%), on account of benefit from lower commodity cost. Interest cost was higher by 195% YoY (-22% QoQ) to INR102mn (v/s est
INR125mn) as short term borrowings to have gone up. Depreciation was up 27% YoY (10.4%QoQ) to INR466m (v/s est. INR427m). Also,
tax rate stood at 27.7% (v/s est 25%). Adj PAT grew ~23% YoY (29% QoQ) to ~INR1.2b (v/s est. ~INR1b).
519 486 518 509 476 502 533 565 584 676 655 603 638 679
(3.2
) (19.
6)
(2.1
)
(4.1
)
(8.4
)
3.3
2.7
10.
9
22.
8
34.
7
23.
0
6.7
9.2
0.4
1QFY
13
2QFY
13
3QFY
13
4QFY
13
1QFY
14
2QFY
14
3QFY
14
4QFY
14
1QFY
15
2QFY
15
3QFY
15
4QFY
15
1QFY
16
2QFY
16
Volumes ('000 units) Growth (%)
0.2
11.9
(13.0)
17.8
Motorcycles Scooters Mopeds 3Ws
Growth YoY (1QFY16)
37 35 38 37 43 39 39 31 39 38 38 36 40 38
22 25 22 19 25 24 23
20 26 29 28 28 26 32
39 38 38 41 28 32 34 45 31 29 29 31 29 25 2 3 3 3 3 5 4 4 4 4 4 4 5 5
1QFY
13
2QFY
13
3QFY
13
4QFY
13
1QFY
14
2QFY
14
3QFY
14
4QFY
14
1QFY
15
2QFY
15
3QFY
15
4QFY
15
1QFY
16
2QFY
16
3Ws Mopeds Scooters Motorcycles
18.5
17.1
18.0
17.5
17.6
19.9
20.6
21.6
23.1
26.8
26.5
24.6
26.2
28.8
5.9
(14.0)
1.3 6.8
(4.8)
16.1 14.4
23.5 31.0 34.9
28.9
13.8 13.7 7.4
1QFY
13
2QFY
13
3QFY
13
4QFY
13
1QFY
14
2QFY
14
3QFY
14
4QFY
14
1QFY
15
2QFY
15
3QFY
15
4QFY
15
1QFY
16
2QFY
16
Net sales (INR b) Growth (%)
27 October 2015 3
TVS Motor Company
Exhibit 5: EBITDA margin up to 7.4% (up 120bp QoQ)
Source: Company, MOSL
Exhibit 6: PAT at 23% on EBITDA margin expansion
Source: Company, MOSL
Other key highlight from the conference call TVSL targets 15% market share in domestic 2W business by FY16 end and 27%
market share in 3W Exports. New product launches (Victor and new Apache) on track for 4QFY16. Strong
growth in Jupiter led to postponement of new launches. New Moped: Launched in UP, with PAN-India launch in 3 months. Festive season growth healthy single digit. TVS-BWM alliance product launch in FY17 (both for TVS as well as BMW).
Investment of EUR20m in alliance. Indonesia: Volumes of 6800 units for 2QFY16. Exporting Bebex/Scubex from
Indonesia to Africa, LatAm, Middle East etc. Indonesia capacity of 20k/month v/s 2.5-3k/month production now.
No price increase taken in 2QFY16 Some benefit of soft commodity prices might come in 2HFY16. Part benefit of favourable forex passed on to the distributors in Exports. Exports: INR6.9b USD/INR realization at INR65 in 2QFY16. TVS Motor Credit: Book size of INR30b, highly profitable business. Capex: INR3.5b in FY16. Current utilization at 90% in India. Might have to add
capacity for Scooters and Victor/Apache depending on demand going ahead. Currently ~35% of volumes of TVS motor are bought through financing by
customers. TVSL has made investment of INR267m in Indonesian subsidiary and INR250m in
TVS motor services.
BMW Motorrad tie-up to give additional revenue stream, technological edge We believe this tie-up would give TVSL an additional revenue stream in the form
of contract manufacturing for BMW Motorrad. Moreover, it would give an aspirational value to TVSL products, particularly premium ones.
TVSL would invest EUR20m over CY13-15, with the first product expected to be launched by FY17.
BMW showcased concept from TVS alliance in Brazil, receiving very good response.
We are yet to factor in for this alliance in our estimates, now factor in for TVS-BMW alliance in our estimates.
1,07
5
1,01
1
1,06
7
938
989
1,17
1
1,23
4
1,42
8
1,31
2
1,62
7
1,60
2
1,50
2
1,63
7
2,11
9
5.8 5.9 5.9 5.4 5.6 5.9 6.0 6.6 5.7 6.1 6.0 6.1 6.2 7.4
1QFY
13
2QFY
13
3QFY
13
4QFY
13
1QFY
14
2QFY
14
3QFY
14
4QFY
14
1QFY
15
2QFY
15
3QFY
15
4QFY
15
1QFY
16
2QFY
16
EBITDA (INR m) EBITDA margin (%)
511
452
525
581
519
586
688
852
723
948
902
905
903
1,1
64
(13.1)
(40.9)
(7.2) 1.6 1.5 29.6
31.2 46.6 39.4
61.9
31.1
6.2 24.8 22.8
1Q
FY13
2Q
FY13
3Q
FY13
4Q
FY13
1Q
FY14
2Q
FY14
3Q
FY14
4QFY
14
1QFY
15
2QFY
15
3QFY
15
4QFY
15
1QFY
16
2QFY
16
PAT Growth (%)
27 October 2015 4
TVS Motor Company
Based on ~10% market share for BMW (BMW enjoys ~14% market share in >650cc segment) in global market in 250-650cc segment (~1m units market size), implies EPS contribution of INR3 per share.
We value this alliance at 12.5x FY17E EPS resulting in INR37 per share to our target price.
Exhibit 7: TVS-BMW concept bike
Source: Company
Exhibit 8: Motorcycle industry volumes (>250 cc) in select global markets Europe 400-450k units USA 400-450k units India 400k units Brazil 150k units Canada 35k units Japan 32k units Australia 30k units Others 60k units Size of (250cc-650cc) Motorcycle market 1mn Units Size of (650cc and above) Motorcycle market 1mn Units
Source: MOSL
Exhibit 9: TVS-BMW alliance scenario analysis Scenario - Potential Market Share (%) 5 10 14 17.5 TVS - BMW Alliance FY17E FY17E FY17E FY17E Volumes global market (250-650cc) Units 1,000,000 1,000,000 1,000,000 1,000,000 Volumes (Units) 50,000 100,000 140,000 175,000 Net Realization (INR) 238,645 238,645 238,645 238,645 Revenues in (INR m) 11,932 23,865 33,410 41,763 EBITDA Margins (%) 8 8 8 8 EBITDA (INR m) 955 1,909 2,673 3,341 Tax rate (%) 25 26 25 25 PAT (INR m) 715.9 1412.8 2004.6 2505.8 Incremental contribution to EPS 2
4 5
EPS (Post JV) 18 19 20 21 Upside to FY17 EPS on account of JV (%) 9 19 26 33
Source: Company, MOSL
27 October 2015 5
TVS Motor Company
Valuation and view Recent launches driving resurgence; becomes 2nd and 3rd largest in scooters
and dom. 2Ws respectively: Successful launch of Jupiter and Star City Plus are driving customers back to TVS brand, after long time. Market share in both the scooters and motorcycles are on rising trend, with TVS now the 2nd largest in scooters and 3rd largest in domestic 2W. Expect market share gains to continue as recent launches (Star City+ and Scooty Zest) in Southern market (key market for TVSL) gains traction.
Still 40% of the market unaddressed; Victor 110cc motorcycle re-launch could give disproportionate benefit: Recent launches have seen encouraging customer response and have driven significant market share gains. Successful launch of new launches could give disproportionate benefit led by improving brand acceptance and wide distribution network (2nd best to HMCL). Recovery in industry growth, ramp-up in production of recent launches and upcoming re-launch of Victor motorcycle (in Executive segment which is ~40% of total 2W industry) to drive ~14% volume CAGR over FY15-17E.
EBITDA margins to improve 250bp over FY15-17E with improving market position and scale, expect: TVSL has been generally aggressive in pricing the products due to its weak brand equity. Improving competitive positioning together with operating leverage (particularly on marketing and employee cost) to drive 250bp margin expansion to 8.5% over FY15-17E.
BMW Motorrad tie-up to give additional revenue stream, technological edge: Not factored in our estimates: We believe this tie-up would give TVSL an additional revenue stream in the form of contract manufacturing for BMW Motorrad. Moreover, it would give an aspiration value to TVSL products, particularly premium ones. TVSL would invest EUR20m over CY13-15, with the first product expected to be launched by FY17. We value this alliance at 12.5x FY17E EPS resulting in INR37 per share to our target price.
Valuation and view (new launches to watch out for): Considering well positioned scooter portfolio, robust product pipeline coupled with possibility of disproportionate gains on new launch success and further gains from TVS-BMW alliance, we continue to remain positive on the stock. We raise our FY16E EPS by 6% to ~INR9.7, but retain FY17E EPS, to factor in for EBITDA margin expansion in FY16 on account of lower commodity cost benefit. Our estimates are yet to factor in for BMW Alliance. TVSL trades at 28.4x/17.2x FY16E/17E EPS. We value TVSL at ~18x FY17E EPS for core business and now add INR37 per share (~12.5x FY17E EPS of INR3 for TVS-BMW alliance). Maintain Buy with a target price of INR326.
27 October 2015 6
TVS Motor Company
Exhibit 11: Revised forecast (Standalone) (INR m) FY16E FY17E Rev Old Chg (%) Rev Old Chg (%)
Volumes (units) 2,698,319 2,698,319 - 3,242,165 3,203,917 1.2
Net Sales 115,295 115,295 0.0 145,247 144,031 0.8
EBITDA 8,186 7,729 5.9 12,346 12,103 2.0
EBITDA (%) 7.1 6.7 40bp 8.5 8.4 10bp
Net Profit 4,626 4,365 6.0 7,619 7,590 0.4
EPS (INR) 9.7 9.2 6.0 16.0 16.0 0.4
Source: Company, MOSL
Exhibit 12: Valuations trading above historical average, reflecting improving fundamentals
Source: MOSL
Source: MOSL
Exhibit 13: Comparative valuation CMP * Rating TP P/E (x) EV/EBITDA (x) RoE (%) RoCE (%) Auto OEM's (INR) (INR) FY16E FY17E FY16E FY17E FY16E FY17E FY16E FY17E
Bajaj Auto 2,582 Buy 3,118 19.7 15.5 12.3 10.1 33.2 36.1 47.6 48.3
Hero MotoCorp 2,620 Buy 2,862 16.6 14.6 10.6 9.5 43.3 40.5 60.4 55.3
TVS Motor 276 Buy 326 28.4 17.2 17.1 11.1 25.5 33.3 24.3 32.7
M&M 1,250 Neutral 1,129 19.5 15.6 14.7 12.9 16.0 15.9 17.7 17.8
Maruti Suzuki 4,495 Buy 5,098 26.2 18.7 12.8 10.0 18.5 21.9 25.8 29.5
Tata Motors 383 Buy 491 8.8 7.1 3.8 3.1 21.9 21.0 18.1 18.4
Ashok Leyland 93 Buy 110 23.4 12.1 11.3 6.7 20.2 31.8 21.3 32.8
Eicher Motors# 17,688 Buy 24,283 49.6 28.1 27.3 16.2 34.7 44.6 36.8 51.9
Auto Ancillaries
Bharat Forge 914 Buy 1,252 24.0 18.3 12.8 10.5 23.6 25.9 24.6 28.0
Exide Industries 161 Buy 180 21.9 18.0 12.9 10.4 14.0 15.2 19.3 20.7
Amara Raja 977 Buy 1,139 31.9 21.4 18.1 13.2 27.6 32.8 38.3 43.0
BOSCH 21,650 Buy 26,864 48.3 35.2 32.1 23.7 17.8 21.1 26.4 29.8
# Nos. are on CY basis Source: Company, MOSL
19.1
11.5
14.3
14.2
0
8
16
24
32
40
Mar
-01
May
-02
Jun-
03
Aug-
04
Sep-
05
Nov
-06
Dec
-07
Jan-
09
Mar
-10
Apr-
11
Jun-
12
Jul-1
3
Sep-
14
Oct
-15
P/E (x) 14 Yrs Avg(x) 5 Yrs Avg(x) 10 Yrs Avg(x)
5.2
1.8
3.0
2.1
0.0
2.0
4.0
6.0
8.0
10.0
Mar
-01
May
-02
Jun-
03
Aug-
04
Sep-
05
Nov
-06
Dec
-07
Jan-
09
Mar
-10
Apr-
11
Jun-
12
Jul-1
3
Sep-
14
Oct
-15
P/B (x) 14 Yrs Avg(x) 5 Yrs Avg(x) 10 Yrs Avg(x)
27 October 2015 7
TVS Motor Company
Story in charts: Robust ~48% EPS CAGR over FY15-17E
Exhibit 14: Expect volume CAGR of ~14% over FY15-17E
Source: Company, MOSL
Exhibit 15: Strong 20% CAGR in revenues over FY15-17E
Source: Company, MOSL
Exhibit 16: Strong franchise, operating leverage to drive margins
Source: Company, MOSL
Exhibit 17: Higher PAT growth with better margins, lower interest cost
Source: Company, MOSL
Exhibit 18: FCF to remain strong despite high capex plans
Source: Company, MOSL
Exhibit 19: Sharp improvement in return ratios
Source: Company, MOSL
2,19
8
2,03
2
2,08
0
2,56
1
2,74
6
3,30
4
8.2
-7.5
2.4
23.1
7.2
20.3
FY12 FY13 FY14 FY15 FY16E FY17E
Volumes (units) Growth (%)
71,4
15
70,6
50
79,6
19
100,
982
115,
295
145,
247
13.6
-1.1
12.7
26.8
14.2
26.0
FY12 FY13 FY14 FY15 FY16E FY17E
Net sales (INR m) Growth (%)
4,69
4
4,09
0
4,78
1
6,04
3
8,18
6
12,3
46
6.6 5.8 6.0 6.0
7.1
8.5
FY12 FY13 FY14 FY15 FY16E FY17E
EBITDA (INR m) EBITDA margin (%) 2,
491 1,
810
2,60
7
3,47
8
4,62
6
7,61
9
26.3
(27.3)
44.0
33.4
33.0
64.7
FY12 FY13 FY14 FY15 FY16E FY17E
PAT (INR m) Growth (%)
4,440 3,303
5,184
891
7,170
9,575
-1,768 -767
-2,580 -3,669 -3,500 -3,500
2,672 2,536 2,604
-2,778
3,670
6,075
FY12 FY13 FY14 FY15 FY16E FY17E
CFO (INR m) Capex (INR m) FCF (INR m)
19.8 15.7
20.3 21.9 24.3
32.7
23.0
15.1
19.7 22.7
25.5
33.3
FY12 FY13 FY14 FY15 FY16E FY17E
RoCE (%) RoE (%)
27 October 2015 8
TVS Motor Company
Key operating metrics
Exhibit 20: Snapshot of Revenue model units FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E Motorcycle 635,889 640,801 836,831 843,114 749,429 790,463 958,223 1,063,465 1,481,043
Growth (%) 3.0 0.8 30.6 0.8 -11.1 5.5 21.2 11.0 39.3 % of total vols 48.0 41.7 41.2 38.4 36.9 38.1 37.7 39.1 45.3
Scooter 247,756 309,462 452,006 529,091 441,552 475,615 707,026 780,466 836,508 Growth (%) -4.7 24.9 46.1 17.1 -16.5 7.7 48.7 10.4 7.2 % of total vols 18.7 20.1 22.2 24.1 21.7 22.9 27.8 28.7 25.6
Moped 436,767 571,489 703,167 785,942 792,069 730,172 765,182 744,259 796,700 Growth (%) 6.2 30.8 23.0 11.8 0.8 -7.8 4.8 -2.7 7.0 % of total vols 33.0 37.2 34.6 35.8 39.0 35.2 30.1 27.4 24.4
Total 2Ws 1,320,412 1,521,752 1,992,004 2,158,147 1,983,050 1,996,250 2,430,431 2,588,190 3,114,251 Growth (%) 2.4 15.2 30.9 8.3 -8.1 0.7 21.7 6.5 20.3 % of total vols 99.7 99.0 98.0 98.2 97.6 96.1 95.7 95.1 95.3
3Ws 4,613 15,116 39,860 39,792 49,190 80,842 108,379 132,767 152,211 Growth (%) 5,814.1 227.7 163.7 -0.2 23.6 64.3 34.1 22.5 14.6 % of total vols 0.3 1.0 2.0 1.8 2.4 3.9 4.3 4.9 4.7
Domestic 1,131,688 1,369,738 1,787,313 1,910,226 1,787,007 1,762,073 2,122,966 2,223,000 2,694,384 Growth (%) -1.8 21.0 30.5 6.9 -6.5 -1.4 20.5 4.7 21.2 % of total vols 85.4 89.1 88.0 86.9 87.9 84.8 83.6 81.7 82.5
Exports 193,337 167,130 244,551 287,713 245,233 315,019 415,844 497,956 572,079 Growth (%) 41.1 -13.6 46.3 17.6 -14.8 28.5 32.0 19.7 14.9 % of total vols 14.6 10.9 12.0 13.1 12.1 15.2 16.4 18.3 17.5
Total volumes 1,325,025 1,536,868 2,031,864 2,197,939 2,032,240 2,077,092 2,538,810 2,720,957 3,266,463 Growth (%) 2.8 16.0 32.2 8.2 -7.5 2.2 22.2 7.2 20.0
ASP (INR/unit) 27,705 28,390 30,947 32,492 34,765 38,332 39,775 42,373 44,466 Growth (%) 2.5 9.0 5.0 7.0 10.3 3.8 6.5 4.9
Net Sales (INR m) 36,709 43,631 62,880 71,415 70,650 79,619 100,982 115,295 145,247 Growth (%) 14.0 18.9 44.1 13.6 -1.1 12.7 26.8 14.2 26.0
Source: Company, MOSL
27 October 2015 9
TVS Motor Company
Financials and valuations
Standalone - Income Statement (INR Million) Y/E March FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E
Volumes (units) 1533375 2042587 2,185,616 2,044,000 2,073,000 2,518,000 2,698,319 3,242,165
Growth (%) 33.2 7.0 (6.5) 1.4 21.5 7.2 20.2
Net Sales 43,631 62,880 71,415 70,650 79,619 100,982 115,295 145,247 Change (%) 18.9 44.1 13.6 -1.1 12.7 26.8 14.2 26.0
EBITDA 2,094 3,954 4,694 4,090 4,781 6,043 8,186 12,346
Margin (%) 4.8 6.3 6.6 5.8 6.0 6.0 7.1 8.5
Depreciation 1,025 1,073 1,175 1,304 1,317 1,533 1,857 2,035
EBIT 1,069 2,882 3,518 2,786 3,465 4,510 6,329 10,311
Int. and Finance Charges 754 723 571 480 254 274 453 447 PBT after EO Exp. 785 2,481 3,165 1,636 3,525 4,562 6,251 10,295
Tax Rate (%) -15.1 21.6 21.3 29.1 25.8 23.7 26.0 26.0
Reported PAT 903 1,946 2,491 1,160 2,616 3,478 4,626 7,619
PAT Adj for EO items 1,902 1,972 2,491 1,810 2,607 3,478 4,626 7,619
Change (%) 512.0 3.7 26.3 -27.3 44.0 33.4 33.0 64.7
Net Profit 1,902 1,972 2,491 1,810 2,607 3,478 4,626 7,619
Adj EPS 8.0 4.2 5.2 3.8 5.5 7.3 9.7 16.0
Standalone - Balance Sheet (INR Million) Y/E March FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E
Equity Share Capital 238 475 475 475 475 475 475 475
Total Reserves 8,416 9,519 11,221 11,772 13,678 15,979 19,320 25,510
Preference Capital 0 0 0 0 0 0 0 0
Net Worth 8,653 9,994 11,696 12,247 14,153 16,454 19,795 25,986
Minority Interest 0 0 0 0 0 0 0 0
Deferred Liabilities 1,146 957 976 931 1,247 1,528 1,528 1,528
Total Loans 10,033 7,678 8,311 6,345 4,424 9,187 9,687 10,187
Capital Employed 19,832 18,629 20,982 19,523 19,824 27,170 31,011 37,700
Gross Block 19,091 19,723 21,545 22,479 24,723 28,218 32,161 35,661
Less: Accum. Deprn. 9,534 10,347 11,289 12,365 13,466 14,922 16,778 18,813
Net Fixed Assets 9,557 9,376 10,256 10,115 11,257 13,296 15,383 16,849
Capital WIP 271 574 525 361 481 894 450 450
Total Investments 7,393 6,611 9,309 8,688 8,959 10,125 11,375 12,625
Curr. Assets, Loans&Adv. 9,652 12,014 11,055 12,029 14,950 21,728 23,539 32,249
Inventory 2,897 5,279 5,846 5,097 5,482 8,197 9,359 11,790
Account Receivables 2,208 2,706 2,080 3,005 3,341 5,039 5,753 7,247
Cash and Bank Balance 1,010 60 130 175 826 54 1,236 4,687
Loans and Advances 3,537 3,969 2,998 3,752 5,302 8,438 7,191 8,525
Curr. Liability & Prov. 7,342 9,946 10,163 11,670 15,823 18,874 19,737 24,472
Account Payables 6,673 9,453 9,585 11,136 14,612 17,386 18,249 22,984
Provisions 669 494 577 534 1,211 1,488 1,488 1,488
Net Current Assets 2,310 2,068 892 359 -873 2,854 3,802 7,777
Appl. of Funds 19,832 18,629 20,982 19,523 19,824 27,169 31,010 37,700
E: MOSL Estimates 0.0 0.0 0.0 0.0 0.0 -1.0 -1.0 0.0
27 October 2015 10
TVS Motor Company
Financials and valuations
Ratios
Y/E March FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E
Basic (INR)
EPS 8.0 4.2 5.2 3.8 5.5 7.3 9.7 16.0
Growth (%) 26.3 -27.3 44.0 33.4 33.0 64.7
Cash EPS 12.3 6.4 7.7 6.6 8.3 10.5 13.6 20.3
BV/Share 36.4 21.0 24.6 25.8 29.8 34.6 41.7 54.7
DPS 0.6 1.1 1.3 1.2 1.4 1.9 2.3 2.5
Payout (%) 36.4 31.1 28.8 56.5 29.6 30.5 27.8 18.7
Valuation (x)
P/E 34.5 66.5 52.7 72.5 50.3 37.7 28.4 17.2
Cash P/E 22.4 43.1 35.8 42.1 33.4 26.2 20.2 13.6
P/BV 7.6 13.1 11.2 10.7 9.3 8.0 6.6 5.0
EV/Sales 3.2 2.2 2.0 1.9 1.7 1.4 1.2 0.9
EV/EBITDA 67.0 35.1 29.7 33.6 28.2 23.2 17.1 11.1
Dividend Yield (%) 0.2 0.4 0.5 0.4 0.5 0.7 0.8 0.9
Return Ratios (%)
RoE 22.7 21.2 23.0 15.1 19.7 22.7 25.5 33.3
RoCE 13.4 17.8 19.8 15.7 20.3 21.9 24.3 32.7
RoIC 2.9 14.5 19.7 14.7 23.0 23.9 24.6 37.6
Working Capital Ratios
Asset Turnover (x) 2.2 3.4 3.4 3.6 4.0 3.7 3.7 3.9
Inventory (Days) 24.2 30.6 29.9 26.3 25.1 29.6 29.6 29.6
Debtor (Days) 17 14 10 14 14 17 17 17
Creditor (Days) 56 55 49 58 67 63 58 58
Working Capital (Days) 11 12 4 1 -8 10 8 8
Leverage Ratio (x)
Current Ratio 1.3 1.2 1.1 1.0 0.9 1.2 1.2 1.3
Debt/Equity 1.2 0.8 0.7 0.5 0.3 0.6 0.5 0.4
Standalone - Cash Flow Statement (INR Million) Y/E March FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E
CF from Operating incl EO 3,389 2,341 4,409 4,181 5,238 846 6,795 9,144
(inc)/dec in FA 75 -1,074 -1,768 -767 -2,580 -3,669 -3,500 -3,500
Free Cash Flow 3,464 1,268 2,640 3,414 2,658 -2,823 3,295 5,644
CF from Investments -2,853 -21 -3,809 -985 -2,598 -4,933 -4,375 -4,319
(Inc)/Dec in Debt 2,023 -3,968 -778 -276 -1,069 4,429 500 500
Interest Paid -754 -703 -571 -517 -230 -285 -453 -447
Dividend Paid -389 -411 -659 -715 -690 -831 -1,285 -1,428
CF from Fin. Activity 880 -3,271 -530 -3,152 -1,988 3,308 -1,238 -1,375
Inc/Dec of Cash 1,417 -950 70 45 651 -778 1,182 3,450
Add: Beginning Balance -407 1,010 60 130 175 832 54 1,236
Closing Balance 1,010 60 130 175 826 54 1,236 4,687
27 October 2015 11
TVS Motor Company
Corporate profile: TVS Motor Company
Exhibit 22: Shareholding pattern (%) Jun-15 Mar-15 Jun-14
Promoter 57.4 57.4 57.4
DII 13.6 12.1 14.5
FII 13.5 14.2 8.8
Others 15.5 16.3 19.4
Note: FII Includes depository receipts
Exhibit 23: Top holders Holder Name % Holding
Reliance Capital Trustee Company Limited 7.3
HSBC Bank (Mauritius) Limited 4.4
Franklin Templeton Mutual Fund 3.8
Franklin Templeton Investment Funds 2.3
Tree Line Asia Master Fund (Singapore) 1.5
Reliance Capital Trustee Company Limited 7.3
Exhibit 24: Top management Name Designation
Venu Srinivasan Chairman & Managing Director
Sudarshan Venu Joint Managing Director
K.N. Radhakrishnan President & CEO
S.G. Murali Executive Vice President - Finance
Exhibit 25: Directors Name Name
Venu Srinivasan H Lakshmanan
Sudarshan Venu R Ramakrishnan
C R Dua* Prince Asirvatham*
T Kannan* Hemant Krishan Singh*
K S Bajpai* Lakshmi Venu
*Independent
Exhibit 26: Auditors
Name Type
V Sankar Aiyar & Co Statutory A N Raman Cost Auditor
Exhibit 27: MOSL forecast v/s consensus EPS
(INR) MOSL
forecast Consensus
forecast Variation
(%)
FY16 9.7 9.3 4.8
FY17 16.0 13.1 22.4
Company description TVS Motor Company is 4th largest two-wheeler company in India. TVS Motor Company is the flagship company of the 100 year old six billion USD TVS Group, which has some 40 companies and holdings in the automotive sector. TVS Motor Company offers the widest range of product in the Indian two and three wheeler industry. TVS Motor Company has international presence in more than 50 countries in Asia, Africa and Latin America.
Exhibit 21: Sensex rebased
COMPANIES
COMPANIES
SECTOR UPDATES
TVS GALLERY
27 October 2015 13
TVS Motor Company
N O T E S
27 October 2015 14
TVS Motor Company
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Disclosure of Interest Statement TVS MOTOR CO LTD Analyst ownership of the stock No Served as an officer, director or employee No
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