TVS Motor targets 14.5% market share in domestic two-wheeler industry in FY16

Company plans to invest Rs 350 crore in FY16

TVS Motor is targeting 14.5 per cent market share in domestic two-wheeler industry by FY16. The company is also targeting exports of four lakh two-wheelers in FY16, which is an export market share of 15 per cent.

The company also plans to invest around Rs 350 crore during the current fiscal. The investment is to be spent on product development, capacity expansion. The export market share of the two-wheeler business is targeted to grow to 20 per cent over the next two years, the company said.

An e-mail sent to the company for comment did not elicit any response.

The company said launch of its new motorcycle 'Victor' is going to happen before the festive season and a second motorcycle brand is slated to be launched before the end of the year.

Reports by Motilal Oswal and Prabhudas Lilladher,  which were released earlier today, have confirmed the management's decisions.

According to Motilal Oswal report, excise exemption for the company's Himachal Plant (20 per cent of volumes) would be expiring from June 2017.

The report added that the launch of Jupiter and Star City Plus is driving customers back to TVS brand after a long time. Market share in both the scooters and motorcycles are on rising trend, with TVS now the third largest among domestic two-wheelers.

Recovery in industry growth, ramp-up in production of recent launches and upcoming re-launch of Victor motorcycle (in executive segment which is 40% of total two-wheeler industry) will drive volume CAGR over FY15-17, according to Motilal Oswal.

On the first quarter results, Motilal Oswal said they were below estimates and disappointment continues in terms of margins.

Prabhudas Lilladher's report also echoed a similar view: "TVS Motors' Q1FY16 results were disappointing yet again at the operating performance level. As against an expected EBITDA margin of 7 per cent, the company reported a mere 6.2 per cent. Management has assured of a QoQ improvement in margins every quarter hereon. However, so far the trend in operating performance has remained stagnant at 6 per cent despite healthy volume growth. Other than the lower EBITDA margin, Q1 results were largely in line with expectations."

"Management's commentary of targeting 10 per cent EBITDA margin in three years appears to be a difficult target to achieve, given the continuous brand-building and sales promotion exercise required for volume growth," according to the Prabhudas Lilladher report.

TVS Motor Company Ltd has posted a 25 per cent increase in net profit to Rs 90.2 crore for the quarter ended June 30, 2015 from Rs 72.3 crore for the quarter ended June 30, 2014. Total Income has increased to Rs 2,630.8 crore for the quarter ended June 30, 2015 from Rs 2,313.6 crore for the quarter ended June 30, 2014, an increase of 13.71 per cent.

Total two-wheeler sales of the company grew by 8.8 per cent in the quarter ended June 2015, increasing from 5.59 lakh units in the corresponding quarter of the previous year to 6.08 lakh units in the quarter ended June 2015.

Motorcycle sales grew by 11.8 per cent to 2.55 lakh units in the quarter ended June 2015 from 2.28 lakh units in the quarter ended June 2014. Scooter sales grew by 8.6 per cent in the quarter ended June 2015 increasing from 1.52 lakh units recorded in the quarter ended June 2014 to 1.65 lakh.

Two- and three-wheeler exports of the company registered a growth of 22.7 per cent with sales increasing from 0.97 lakh units in the quarter ended June 2014 to 1.19 lakh units in the quarter ended June 2015.