TVS Motor reports substantial jump in revenue, profit for Q4 on low base effect
Premium- TVS Motor reported 292% year-on-year increase in net profit to Rs289 crore on the back of robust recovery in sales of its vehicles
TVS Motor Company – one of the country’s leading two-wheeler manufacturers – on Tuesday, reported a whopping 292% year-on-year increase in net profit to ₹289 crore on the back of robust recovery in sales of its vehicles especially in export markets. The company reported a net profit of just ₹74 crore in the year ago period.
The growth though has come on a low base of FY 20 when vehicle sales declined due to shift to new emission and safety norms and economic slowdown. In the fourth quarter of FY 20, vehicle production was also impacted due to shortage of critical parts from China because covid-19 pandemic triggered lockdown in China.
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The company's net sales during the March quarter increased by 53% year-on-year to ₹5322 crore on the back of 47% jump in total vehicle sales to 9.28 lakh units. In the corresponding period, TVS reported revenues of ₹3481 crore.
According to the company, total export of two-wheelers and three-wheelers registered a growth of 58% at 3.22 Lakh units in fourth quarter as against 2.04 Lakh units in the year ago period.
Despite a significant rise in the raw material cost, the operating profit or earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 119% to ₹536 crore. While the operating margins also expanded by 310 basis points to 7% due to the overall cost savings efforts of the company.
“TVS delivered healthy performance in 4QFY21. We expect its domestic volume to witness a double-digit growth in FY22E. We expect healthy 14% CAGR for export over FY21E-FY23E on the back of strong sales in African markets. In view of healthy rural sales, strong products basket, improving brand equity, healthy export potential, better margin trajectory, healthy volumes over the next two years and better return ratio, we maintain BUY on TVSL with a 2-Year Target Price of Rs575," said Mitul Shah, head of research, Reliance Securities.
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