TVS Motor share price jumps 4% despite fall in Q3 profit, Morgan Stanley remains underweight


Share price of motorcycle manufacturing company TVS Motor Company jumped 4 percent intraday on February 5 despite the company reporting a 20.7 percent decline in consolidated net profit at Rs 156.84 crore for the third quarter ended on December 31, 2019, hit by lower sales during the period.

The company had posted a net profit of Rs 197.79 crore in the December quarter of 2018-19.

Total income of the company declined to Rs 4,779.32 crore for the third quarter as compared with Rs 5,123.50 crore in the year-ago period, TVS Motor Company said in a regulatory filing.

The company said its overall two-wheeler sales during the third quarter ended December 2019 stood at 7.73 lakh units as compared with 9.5 lakh units in the quarter ended December 2018.

On the other hand, total three-wheelers sales grew 22.1 percent to 48,391 units in the said quarter as against 39,629 units in October-December period of 2018-19.

Total exports of the company grew 22.6 percent to 2.17 lakh units during the third quarter as against 1.77 lakh units in the year-ago period. It also re-appointed Venu Srinivasan as the chairman and managing director for a further period of five years, effective April 24, 2020, TVS Motor Company said.

Global research firm Morgan Stanley has an underweight call on the stock price and has a target of Rs 326 per share amid electrification and emission headwinds adding that valuations relative to its peers remain high.

The key concern is that BS-VI cost hikes are much higher than EBITDA per unit and margin could start to slip as the industry moves to BS-VI. It sees EV scooters as a risk to the company’s business.

The stock witnessed a spurt in volume by more than 1.54 times and was trading with volumes of 79,650 shares, compared to its five day average of 56,978 shares, an increase of 39.79 percent.

It gained over 25 percent in the last six months and was quoting at Rs 473.20, up Rs 18.65, or 4.10 percent.

News Source:- Moneycontrol

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