TVS Motor Shares Slump After Q1 Net Profit Misses Estimate

TVS Motor Company Ltd.’s shares slumped the most in nine months after the company’s net profit declined, missing analyst estimates.

Net profit fell 6.8 percent year-on-year to Rs 129 crore in the June-ended quarter of the financial year 2016-17, according to the company’s stock exchange filing. The Bloomberg consensus estimate stood at Rs 162 crore. The company made a provision of Rs 16.50 crore for additional discounts offered to dealers for selling vehicles at revised prices after the implementation of the Goods and Services Tax.

Revenue increased nearly 19 percent to Rs 3,743 crore compared to the same quarter last year. This surpassed the Bloomberg consensus estimate of Rs 3,148 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 5.6 percent to Rs 211.4 crore year-on-year while the margin contracted 70 basis points to 6.2 percent in the same period.

Total expenses rose 16.5 percent, year-on-year, to Rs 3,620 crore, including costs of raw materials which rose 17.7 percent.

Sales Volumes

• Two-wheeler sales rose 12 percent to 7.85 lakh units year-on-year.
• Motorcycle sales rose 16.8 percent to 3.30 lakh units compared to the same quarter last year.
• Scooter sales rose 31.2 percent to 2.58 lakh units year-on-year.
• Three-wheeler sales fell 300 units to 17,037 units year-on-year.
• Exports of two-wheelers rose 23.7 percent to 1.11 lakh units year-on-year.

GST-Related Price Cuts

The company has passed on the benefit of GST to consumers by reducing prices, it said in a media statement. “The price reduction is in the range of Rs 350 to Rs 1,500 in the commuter segment. In the premium segment, the prices were reduced up to Rs 4,150 depending on state level taxes in the pre-GST period,” the statement said.

TVS Motor shares fell nearly 8 percent to Rs 533 on the BSE after the earnings announcement.