Margin expansion key trigger for TVS Motor

New launches coupled with improving product mix will rub off positively on volumes and margins

After shedding over six per cent on Friday, the TVS Motor stock recouped about half the losses on Monday to close at Rs 553. The reaction on Friday was to the weak quarterly numbers reported by the company, especially on the margin front. Higher raw material costs, inferior product mix and GST-related compensation to dealers impacted the margins, which at 6.2 per cent fell 80 basis points (bps) on a year-on-year (y-o-y) basis. This is lower than analysts’ estimates which had projected it around the 7-7.5 per cent mark. 

While the company’s share of higher-margin mopeds fell in the quarter,