TVS Motor Q2 Review - Healthy Exports And New Launches To Aid Higher Margins: Reliance Securities

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Reliance Securities Report

TVS Motor Company Ltd. (TVSL) has delivered a strong operating performance, with a double-digit Ebitda margin for the first time in its history during Q2 FY22, on the back of a healthy realisation and better mix.

Revenue grew by 22% YoY and 43% QoQ to Rs 56.2 billion, on the back of a volume growth of 6%YoY/39%QoQ and a 16% YoY improvement in average realisation.

Its Ebitda margin expanded by 60bps YoY (up 306bps QoQ) to 10% versus our estimate of 8.3%, mainly due to the lower employee expenses, control on other expenses and cost-cutting measures on the raw material front.

TVSL profit after tax came in at Rs 2.8 billion (up 42% YoY and up 268% QoQ), exceeding our estimate by 29%. ASP growth was supported by product-mix, price hike, higher exports, and a favourable exchange rate.

We believe that the better product-mix and rising export contribution, coupled with a favourable exchange rate would support TVSL’s margin expansion, going forward.

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