BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Systematix Report
TVS Motor Company Ltd.'s Q2 FY22 Ebitda margin at 9.6% (4% below our estimates and 5% above consensus) was aided by higher profitability from the sale of spare parts and resumption of export incentives in a difficult demand environment.
Commodity inflation and a weak product mix led to another quarter of gross margin contraction (-60 bps QoQ) but price hikes and cost rationalisation measures partially offset the impact.
The management indicated that festive demand has been weak; it expects rural demand to bounce back in H2 FY22.
On the electric vehicles (EV) front, the company has announced investments worth Rs 10 billion (Rs 3 billion in the current year) towards product development and capacity expansion (currently 1,20,000 units per annum). It will start product launches from H2 FY22.
The export (30% of sales) momentum remains strong across markets and demand is likely to outperform domestic sales. TVSL expects input costs to increase in Q3 FY22 and has taken a price hike of 1.1% in Oct. 2021.
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