TVS Motor: Robust growth in sales volume

ANALYSTS' CORNER

IDBI Capital recommends a "buy" on TVS Motor. The report estimates FY06 revenues for the company was Rs 3431 crore and PAT was Rs 113 crore.

The company has shown strong growth numbers in its sales volumes for April 2006. The growth has been principally led by motorcycles, which showed very high growth rates of about 53 per cent as compared to the same month of the previous year.

The mopeds have also shown a robust growth of about 28 per cent as compared to the same month of previous year. TVS Star and its variants clocked volumes of over 60,000, while the Victor showed volumes of around 15,000 for April 2006.

The newly launched TVS Apache clocked volumes of around 5,000 vehicles. The company is in the process of ramping up production and spread its availability in more towns in the coming months.

Bajaj Auto: Gain in domestic market share

Edelweiss Capital, recommends a "buy" on Bajaj Auto. The report sees continued market share gain for the company in the fast growing domestic motorcycles space combined with additional growth from three-wheelers and export markets.

It expects a very high EPS CAGR of 28 per cent over FY06-08E, which should raise the share value. Total revenues were at Rs 2166 crore (up 31.5 per cent y-o-y) for Q4 FY06 and at Rs 7668 crore (up 29.4 per cent) for FY06.

Units sold in FY06 were 23 lakh (up 26 per cent) while average realisation increased 2.7 per cent to Rs 33,358. Net profit (adjusted) for FY06 grew 46.8 per cent to Rs 1123 crore.

The company's EBITDA margin expansion continues as it derives more benefits of improving operating leverage. (due to revenue growth and increasing share of production coming from the newer plants, which have higher utilisation rates and productivity.

Ashok Leyland: M&HCVs sales pick up

Citigroup Equity Research, in its report on Ashok Leyland, states that April sales of the company were up 47 per cent, driven by medium & heavy commercial vehicles (M&HCVs) goods sales growth of over 61 per cent. Bus sales declined nine per cent y-o-y.

The report notes that these sales are typically lumpy and dependent on contracts given by State Transport Undertakings.

Overall, the growth in M&HCV domestic sales reflected strong industrial and construction activity and benefits from the Supreme Court order banning overloading.

Domestic sales accounted for 94 per cent of overall sales, while exports accounted for the rest. The report expects exports to account for about eight per cent of overall sales into FY07, given the robust growth expected in the domestic market.

During April the company hiked prices across product categories by 2.5 per cent, an indication of the strong demand environment and the industry's ability to absorb price hikes.