TVS Motor beats Street, profit rises by 21% in Q2

TVS Motor has reported a 20.7 per cent rise in profit at ~255.01 crore during the quarter ended September (Q2), against ~211.31 crore in the same period a year ago.

The Street was expecting a double-digit decline in revenue and profit amid weak demand.

Profit before tax (PBT) for the quarter was ~310.3 crore, against ~306.2 crore a year ago. PBT of the quarter includes an exceptional gain of ~76 crore towards reversal of NCCD provision for Himachal Pradesh plant pertaining to earlier years. This is pursuant to a favourable order from the Customs, Excise and Service Tax Appellate Tribunal. Ebitda margin expanded by 21 basis points (bps) year on year and 82 bps quarter on quarter to 8.8 per cent, led by cost reduction programmes, product mix, and higher exports contribution.

K N Radhakrishnan, TVS Motor's president, chief executive officer and additional whole-time director, said the firm’s overall focus on building brands on one side, exports market (grew by 4 per cent), cost reduction initiatives, helped and it would continue to do so.

The firm also increased prices by 0.3 per cent in the second quarter and 0.1 per cent in the first quarter. Notwithstanding the slowdown, TVS said its capex would be around ~600 crore, while investments would be around ~100-120 crore for the financial year. Radhakrishnan is optimistic that Diwali will be better thanks to good monsoon and that the confusion over goods and services tax has settled.

“There is a positive sentiment, especially in rural markets, which is leading to higher walk-ins,” said Radhakrishnan, adding that Q4 and Q1 would be much better.

“THERE IS A POSITIVE SENTIMENT, ESPECIALLY IN RURAL MARKETS, WHICH IS LEADING TO HIGHER WALK-INS” K N RADHAKRISHNAN President, CEO, TVS Motor