How did you find the Q3 numbers of TVS Motor for the current fiscal?

To put it in few words, the performance of TVS Motors may appear tepid but was better than expected. While the offtake of motorcycles and exports were better on yoy basis, sales of scooters were sharply lower on yoy basis and did all the damage to numbers. Operating performance tapered due to pressure on inventory costs amidst microchip shortage. What saved the day was group financial services. Here is a summary of TVS Motor financials.

For Dec-21 quarter, TVS Motor reported 8.24% growth in total sales at Rs.6,597 crore. Overall, the total two wheeler sales were lower by -12.3% for the Dec-21 quarter at 8.35 lakh units. On sequential basis, revenues of TVS Motor Co were up 1.76%. Overall, exports grew 12% yoy while motorcycle sales were up 4.7% at 4.46 lakh units. Scooter sales fell sharply by -17.7% at 2.56 lakh units as shortage of microchips caused higher inventory costs.

Operating profits of TVS Motors for the Dec-21 quarter were lower by -3.93% at Rs.580 crore. This was largely because the automobile segment, especially the scooters unit, saw a spike in inventory costs as the microchip shortage meant more investments locked in working capital cycle. While the automotive vehicles business saw -6.2% fall in EBIT at Rs.346, automotive components slipped into operating loss. Financial services EBIT was up 30% at Rs.73 crore in Q3.

Operating performance put pressure on net profits too. OPM tapered from 9.90% in Dec-20 quarter to 8.79% in the Dec-21 quarter. During the same period, the Net Profits were lower by -12.66% at Rs.247.75 crore as the operating pressures got transmitted to the bottom line. PAT margins tapered from 4.65% in the Dec-20 quarter to 3.76% in the Dec-21 quarter but were flat sequentially. TVS PAT margins are among the lowest in the peer group sector.