TVS Motors (TVSM) is the flagship Company of the USD 2.2 billion TVS Group. TVS Group was founded by Sundaram Iyengar in 1911. TVSM, with an annual turnover of over USD 650 million, is the third largest two wheeler manufacturers in India. It is ranked among the top ten amongst two wheeler makers in the world. TVS group has established significant presence in the manufacture two wheelers, auto ancillaries and computer peripherals. It was in August 1980, TVS motor company made it’s first 50 cc moped, which was named TVS 50.  

The group began its journey in two wheeler industry and slowly has grown into a large manufacturer dominating few segments of two wheeler industry in India TVS Motors is the first company to introduce 100 cc mopeds in India in collaboration with Suzuki. The collaboration however did not last long. Presently Suzuki has its own manufacturing facility in India. TVS Scooty remains to be the most popular product of the company. It is a marvel in styling and engineering when it was launched. It created a new segment in the two wheeler market. However its efforts to tap scooter market of higher engine capacity models ended in a failure. 

 PRODUCTS AND SERVICES 

TVS motor company makes wide range of Motorcycles, scooters, and mopeds, manufacturing them from units located at Hosur and Mysore. Their range of two wheelers include TVS 50, TVS excel, TVS champ, TVS victor, TVS star city, TVS fiero, TVS scooty, TVS centra and latest launch TVS apache. It has continually improved the quality of its products, winning several quality awards for its products. TVS scooty won the NID Design Excellence award for the year 2004. TVS Motor Company is the first two wheeler manufacturer to be honored with the Hallmark of Japanese Quality “The Deming Prize for Total Quality Management”. Japanese Institute of plant maintenance (JIPM) awarded the prestigious “TPM-Excellence Award-first category”. Variable Timing Intelligent (Vt-i) engines, one of the most innovative technologies in the motor industry were developed by the R&D team of TVS Group. It has developed many cutting edge engine technologies. 

FINANCIALS   

The company recently announced its Q1 FY09 results. These results are compared with the last quarter results and tabulated below. 

  The company reported a Net profit of Rs.70.2 Million, an increase of 8.5% as against Rs.64.7 Million posted in the last quarter ended March 31 2008. But as against the same period last year the net profit declined by 7%. Revenues for this quarter moved by 15% to Rs.924.74 from Rs.801.56 posted in the quarter ended June 30 2007. Operating profit for this quarter rose by 72.12% and 63.30 % on QoQ basis and YoY basis respectively. The company for this quarter provided Rs.253.3 Billion for depreciation, an increase of 5.9% as against the same quarter last fiscal.  

SALES  

The company in the month of March launched TVS Scooty Electric. It also launched its three wheeler variants in Kerala. The company in an agreement with All England Lawn Tennis Club rolled out two limited edition scooters on the occasion of Wimbledon Tennis held in the month of June. These models received a great demand in the market. The company’s sales for this quarter stood at 171,700 units, growth of 12% over the previous period sales of 152,100 units. But in the scooter segment the sales declined by 6% to 65,500 from 70,200 units sold in the same period last fiscal. The company reported that this decline in the scooter sales is due to the disruption in the supply of components by some of the Tier II vendors. In the export segment the company witnessed a 50% growth by exporting 42,500 units in the quarter ended June 30 2008.  

The company reported that as it did not launch new variant two wheelers in the last fiscal, its domestic sales remained flat. It also reported that domestic sales is expected to grow by 10-15% this year, as it is planning to broaden its Product portfolio by launching four  new model two wheelers in this fiscal and that includes two scooters and two motor cycle models. The company estimates that its exports would grow by 35-40% in this fiscal, as it is going to expand its market in overseas countries and also planning to foray Indonesia, Latin American and African countries.

It is also planning to roll out a new variant bike in the 200 cc segment to compete with the Bajaj Pulsar a leading model in the two wheeler segment. The company in the month of July launched TVS Apache RTR FI, in the 160cc category. The company for the month of July posted total sales of 118,545 units, 13% growth as against 105,366 units sold in the same period previous year. Exports in July 08 moved up to 16, 015 units and increase by 41% over July 07 performance. TVSM save Motor Cycles volume to grow by 22%. Further, it has successfully launched fuel injection technology in 160 cc bikes in is quest to improve engine performance. 

STOCK OUTLOOK

The Stock is now trading in the level of Rs.30-35. The stock is in a long-term down ward trend since January. It lost nearly 60% in the last 6 months. But the stock resumed from this down ward trend and gained 28% in the last one month. The company has a strong support level at Rs.25 and resistance level at Rs.44. Investors with near term outlook any pick this stock at this level.