TVS Motor Co. Ltd shares zoomed over 6% in intra-day trade on Wednesday after the auto company reported its quarterly earnings for the third quarter ended December (Q3) on Tuesday after market hours.
TVS Motor said consolidated net profit fell 20.7% to Rs 156.84 crore during the December quarter compared with a year ago, mainly on account of lower sales. Total income in Q3 also declined to Rs 4,779.32 crore compared with Rs 5,123.50 crore in the year-ago quarter.
The company’s overall two-wheeler sales during the quarter stood at 773,000 units as compared with 950,000 units in the year-ago quarter.
TVS Motor shares touched a high of Rs 483 apiece in early session, but later pared gains to trade at Rs 469.70, up 3.2%, at 10:58 am. The stock has fallen 5.5% in the last one year compared with a nearly 10% rise in the benchmark Nifty 50 index.
TVS Motor’s Q3 standalone net profit dropped by a sharper 32% to Rs 121 crore due to an exceptional item of Rs 76 crore relating to reinstatement of a provision for the Himachal plant.
The company’s board also declared an interim dividend for the financial year ending March 2020, at the rate of Rs 2.10 per share on 47,50,87,114 equity shares of Re 1 each, absorbing a sum of Rs 120.28 crore, including dividend distribution tax.
After the earnings announcement, global research firm Morgan Stanley issued an ‘underweight’ call on the TVS Motor stock, with a target of Rs 326 per share, citing electrification and emission headwinds as the main reasons. It added that valuations of the auto company relative to its peers remained high, too.
Morgan Stanley said the key concern for TVS Motor is that BS-VI cost hikes are much higher than Ebitda (earnings before interest, tax, depreciation and amortization) per unit and margin could start to slip as the industry moves to BS-VI. The research firm also sees electric scooters as a risk to the company’s business.
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