2QFY2013 Result Update | Automobile

November 1, 2012

TVS Motor Company

Performance Highlights
Quarterly highlights (Standalone)
Y/E March (` cr) Net Sales EBITDA Adj. EBITDA margin (%) Adj. PAT
Source: Company, Angel Research

BUY
CMP Target Price
Investment Period
% chg (yoy) (15.1) (26.9) (97)bp (41.5) 1QFY13 1,820 108 5.9 51 % chg (qoq) (7.1) (5.8) 8bp (11.6)

`39 `45
12 Months

2QFY13 1,691 101 6.0 45

2QFY12 1,991 139 7.0 77

Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Automobile 1,836 638 1.2 69/32 354,294 1.0 18,562 5,645 TVSM.BO TVSL@IN

TVS Motor Company (TVSL) posted a 41.5% yoy (11.6% qoq) decline in net profit for 2QFY2013 which was in-line with our expectations given that volumes during the quarter registered a decline of 19.6% yoy (6.4% qoq). We broadly retain our estimates for the company. We expect the operating environment to remain challenging for TVSL due to rising competition in the sector amidst moderation in demand. We believe that the new launches, Phoenix, launched in September 2012 and two scooters and one motorcycle slated to be launched in FY2014 will be crucial for the company to regain volume momentum going ahead. Nonetheless, due to attractive valuations we maintain our Buy rating the stock. Weak performance for 2QFY2013: For 2QFY2013, TVSLs top-line registered a decline of 15.1% yoy (7.1% qoq) to `1,691cr mainly due to a 19.6% yoy (6.4% qoq) decline in volumes. The weak volume performance can be attributed to general slowdown in the two-wheeler industry and increasing competitive intensity in the two-wheeler sector. At the operating level, the EBITDA margins came in-line with our estimates at 6%, witnessing a decline of 97bp yoy (flat qoq) primarily due to lower operating leverage benefits. While the raw-material cost as a percentage of sales declined 204bp yoy (110bp qoq); employee expenses as a percentage of sales witnessed a sharp increase of 170bp yoy (80bp qoq). As a result, the operating profit and net profit registered a decline of 26.9% (5.8% qoq) and 41.5% yoy (11.6% qoq) respectively. Outlook and valuation: We model in a volume growth of 1.8%/7.8% for FY2013E/14E to factor in the sharp slowdown in the domestic and export two-wheeler markets. We expect the operating margin to remain under pressure due to rising competition which will result in higher advertising spends. Nonetheless, at `39, TVSL is trading at an attractive valuation of 6.9x FY2014E EPS. Thus we maintain our Buy rating on the stock with a target price of `45.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 59.3 20.1 2.8 17.8

Abs. (%) Sensex TVS Motor

3m 7.6 0.4

1yr 6.2 (41.4)

3yr 16.8 42.7

Key financials (Standalone)

Y/E March (` cr) Net Sales % chg Net Profit % chg EBITDA (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2011 6,288 41.9 199 65.7 6.2 4.2 9.2 1.8 21.3 15.2 0.3 4.6

FY2012 7,126 13.3 249 25.3 6.6 5.2 7.4 1.6 22.9 18.5 0.2 3.4

FY2013E 7,466 4.8 228 (8.5) 6.2 4.8 8.1 1.4 18.2 15.6 0.2 3.4

FY2014E 8,290 11.0 266 17.0 6.3 5.6 6.9 1.2 18.7 16.9 0.2 2.8

Yaresh Kothari
022-3935 7800 Ext: 6844 yareshb.kothari@angelbroking.com

Please refer to important disclosures at the end of this report

TVS Motor Company | 2QFY2013 Result Update

Exhibit 1: Quarterly financial performance (Standalone)

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Purchase of goods (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM (%) Interest Depreciation Other Income PBT (excl. Extr. Items) Extr. Income/(Expense) PBT (incl. Extr. Items) (% of Sales) Provision for Taxation (% of PBT) Reported PAT Adj PAT Adj. PATM Equity capital (cr) Reported EPS (`)
Source: Company, Angel Research

2QFY13 1,691 1,185 70.1 108 6.4 37 2.2 259 15.3 1,589 101 6.0 15 32 4 58 58 3.4 13 22.3 45 45 2.7 47.5 1.0

2QFY12 1,991 1,441 72.4 93 4.7 40 2.0 279 14.0 1,853 139 7.0 15 29 6 102 102 5.1 24 24.0 77 77 3.9 47.5 1.6

% chg (yoy) (15.1) (17.7) 15.8 (5.9) (7.2) (14.2) (26.9) 3.3 11.9 (35.2) (42.7) (42.7) (46.7) (41.5) (41.5)

1QFY13 1,820 1,304 71.7 102 5.6 32 1.8 274 15.0 1,712 108 5.9 15 31 5 66 66 3.6 15 22.7 51 51 2.8 47.5

% chg (qoq) (7.1) (9.1) 5.2 15.5 (5.4) (7.2) (5.8) (1.7) 3.3 (18) (12.0) (12.0) (13.5) (1.7) (11.6) (11.6)

1HFY13 3,510 2,489 70.9 210 6.0 70 2.0 532 15.2 3,302 209 5.9 31 63 9 124 124 3.5 28 22.5 96 96 2.7 47.5

1HFY12 3,737 2,722 72.8 184 4.9 72 1.9 504 13.5 3,482 256 6.8 30 56 10 179 179 4.8 43 24.2 136 136 3.6 47.5 2.9

% chg (yoy) (6.1) (8.5) 14.2 (2.7) 5.6 (5.2) (18.3) 2.7 11.9 (7.9) (30.7) (30.7) (35.5) (29.2) (29.2)

(41.5)

1.1

(11.6)

2.0

(29.2)

Exhibit 2: 2QFY2013 Actual vs Angel estimates

Y/E March (` cr) Net Sales EBITDA EBITDA margin (%) Adj. PAT
Source: Company, Angel Research

Actual 1,691 101 6.0 45

Estimates 1,719 102 5.9 44

Variation (%) (1.6) (0.3) 8bp 3.3

November 1, 2012

TVS Motor Company | 2QFY2013 Result Update

Exhibit 3: Quarterly volume performance

(unit) Total volumes Domestic Exports Motorcycles Domestic Exports Total motorcycles Scooters Domestic Exports Total scooters Mopeds Domestic Exports Total mopeds Three-wheelers Domestic Exports Total three-wheelers 4,539 7,674 12,213 3,650 8,033 11,683 24.4 (4.5) 4.5 3,267 5,812 9,079 38.9 32.0 34.5 7,806 13,486 21,292 6,235 15,749 21,984 25.2 (14.4) (3.1) 183,335 448 183,783 192,859 3,478 196,337 (4.9) (87.1) (6.4) 203,247 628 203,875 (9.8) (28.7) (9.9) 386,582 1,076 387,658 383,531 4,939 388,470 0.8 (78.2) (0.2) 117,220 1,881 119,101 148,341 9,121 157,462 (21.0) (79.4) (24.4) 105,366 7,466 112,832 11.3 (74.8) 5.6 222,586 9,347 231,933 257,620 17,365 274,985 (13.6) (46.2) (15.7) 124,935 45,891 170,826 174,877 63,867 238,744 (28.6) (28.1) (28.4) 142,413 50,933 193,346 (12.3) (9.9) (11.6) 267,348 96,824 364,172 330,670 123,125 453,795 (19.1) (21.4) (19.7) 2QFY13 485,923 430,029 55,894 2QFY12 604,226 519,727 84,499 % chg (yoy) (19.6) (17.3) (33.9) 1QFY13 519,132 454,293 64,839 % chg (qoq) (6.4) (5.3) (13.8) 1HFY13 1,005,055 884,322 120,733 1HFY12 1,139,234 978,056 161,178 % chg (yoy) (11.8) (9.6) (25.1)

Source: Company, Angel Research

Top-line down 15.1% yoy: For 2QFY2013, TVSLs top-line registered a decline of 15.1% yoy (7.1% qoq) to `1,691cr mainly due to 19.6% yoy (6.4% qoq) decline in volumes during the quarter. The weak volume performance can be attributed to a general slowdown in the two-wheeler industry and also increasing competition from Honda Motorcycle and Scooters India Ltd (HMSI). As a result, motorcycle and scooters volume registered a sharp decline of 28.4% (11.6% qoq) and 24.4% yoy (up 5.6% qoq) respectively. Three-wheeler sales on the other hand staged a recovery, posting a 4.5% yoy (34.5% qoq) growth driven by 24.4% yoy (38.9% qoq) growth in the domestic markets.

Exhibit 4: Total volumes decline 19.6% yoy

(units) 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0
524,954 524,171 519,514 535,008 33.4 39.9

Exhibit 5: Strong growth in net average realization

(%) 50.0 40.0
485,999

Total volume
604,226

yoy growth (RHS)

(`) 35,000 34,000 33,000 32,000 31,000 30,000 29,000 28,000

6.8

Net average realization

8.9 7.6 8.1 6.7 32,300 6.6 32,808 31,911 30,781 30,285 30,968

yoy growth (RHS)

34,502 34,191 5.9 8.1

(%) 10.0 8.0 6.0 4.0

527,700 528,099 519,132

30.0 20.0 10.0

24.0 15.3 15.1 0.7 1.7

0.0
(3.0) (19.6)

30,352 (2.0)

2.0 0.0 (2.0) (4.0)

(10.0) (20.0) (30.0)

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

Source: Company, Angel Research

Source: Company, Angel Research

November 1, 2012

2QFY13

TVS Motor Company | 2QFY2013 Result Update

Exhibit 6: Better-than-expected top-line growth

(` cr) 2,500 43.0 2,000 1,500 1,000 500 0 Net sales (LHS) 51.1 1,991 34.5 1,820 1,761 1,746 1,691 1,647 1,635 1,627 1,616 25.3 23.2 6.9 (0.5) 4.2 (15.1) Net sales growth (RHS) (%) 60.0 50.0 40.0 30.0 20.0 10.0 0.0 (10.0) (20.0)

Exhibit 7: Domestic market share trend

(%) 25.0 20.0 15.0 10.0 5.0 0.0 4.5 3.7 3.5 2.3 2.6 2.8 3.2 2.9 3.3 15.4 7.1 15.1 6.9 14.7 6.8 14.3 6.3 15.2 6.9 13.4 5.5 13.6 5.9 12.8 5.4 13.1 5.3 21.6 Scooters Three Wheelers 21.9 21.3 22.9 20.5 19.3 15.4 15.3 16.0 Motor Cycles Total Two Wheelers

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

Source: Company, Angel Research

Source: Company, SIAM, Angel Research

EBITDA margin at 6.1%: On the operating front, the EBITDA margin came in-line with our estimates at 6%, witnessing a decline of 97bp yoy (flat qoq) primarily due to lower operating leverage benefits. While the raw-material cost as a percentage of sales declined 204bp yoy (110bp qoq); employee expenses as a percentage of sales witnessed a sharp increase of 170bp yoy (80bp qoq). The management expects margins to improve going ahead, led by improved volumes and benign raw material prices. However, we believe that margins will remain under pressure, given the weak domestic demand scenario and increasing competition.

Exhibit 8: EBITDA margin mainatined at 6%

(%) 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 6.7 6.1 5.9 6.7 7.0 6.5 6.1 5.9 6.0 EBITDA margin 73.7 74.7 74.6 76.9 75.9 Raw material cost/sales 73.9 74.2 74.6 73.6

Exhibit 9: Net profit down 41.5% yoy

(` cr) 90 80 70 60 50 40 30 20 10 0
55 56 44 59 77 57 57 51 45

Net profit (LHS) 3.9 3.4 3.4 2.7 3.4

Net profit margin (RHS) 3.5 2.8 2.7

(%) 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

3.2

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

Source: Company, Angel Research

Source: Company, Angel Research

Net profit down 41.5% yoy: TVSL reported a 41.5% yoy (11.6% qoq) decline in its net profit to `45cr; which was broadly in-line with our estimates. The bottom-line performance during the quarter was weak led by weak performance at the operating level.

November 1, 2012

2QFY13

2QFY13

TVS Motor Company | 2QFY2013 Result Update

Investment arguments
Success of new launches key to volume growth: TVSL posted a healthy 8.1% yoy growth in its volumes in FY2012 amidst slowdown in two-wheeler demand and rising competitive intensity in the sector. TVSL is in the process of launching three new models in FY2014 (executive segment bike, two scooters and a diesel three-wheeler), and we believe the success of these new launches is the key for the company to register volume growth going ahead. We expect the new launches to enable TVSL to ramp up its monthly run rate of two-wheelers and post annual volumes of 2.41mn units in FY2014E. Adverse product mix to weaken margins: Declining contribution of three-wheelers and scooters in the overall product mix coupled with rising competition is likely to pressurize the companys operating margin going ahead. Nonetheless, weakening of commodity prices will provide some comfort on the margin front. We expect the companys margin to decline by ~40bp in FY2013.

Outlook and valuation

We model in a volume growth of 1.8%/7.8% for FY2013E/14E to factor in the sharp slowdown in the domestic and export two-wheeler markets. We expect operating margins to remain under pressure due to rising competition which will result in higher advertising spends. Nevertheless, we broadly retain our estimates for the company.

Exhibit 10: Change in estimates

Y/E March Net Sales (` cr) OPM (%) EPS (`)
Source: Company, Angel Research

Earlier Estimates 7,500 6.3 4.8 8,350 6.4 5.5

Revised Estimates 7,466 6.2 4.8 8,290 6.3 5.6

% chg (0.5) (10)bp (0.4) (0.7) (6)bp 1.7

FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E

We expect the operating environment to remain challenging for TVSL due to rising competition in the sector amidst moderation in demand. We believe that the new launch, Phoenix, launched in September 2012 and two scooters and one motorcycle slated to be launched in FY2014 will be crucial for the company to regain volume momentum going ahead. At the current market price of `39, TVSL is trading at an attractive valuation of 6.9x FY2014E EPS. Thus we maintain our Buy rating on the stock with a target price of `45.

November 1, 2012

TVS Motor Company | 2QFY2013 Result Update

Exhibit 11: Key assumptions

Y/E March Total volume (units) Motorcycles Scooters Mopeds Three-Wheelers Change yoy (%) Motorcycles Scooters Mopeds Three-Wheelers Domestic (units) Exports (units)
Source: Company, Angel Research

FY09 1,321,534 634,918 246,153 435,589 4,874 3.8 6.2 (6.9) 5.9 3,707.8 1,128,136 193,398

FY10 1,536,895 640,965 309,501 571,563 14,866 16.3 1.0 25.7 31.2 205.0 1,371,481 165,414

FY11 2,032,404 836,821 452,006 703,717 39,860 32.2 30.6 46.0 23.1 168.1 1,797,993 234,411

FY12 2,196,138 841,362 529,095 785,942 39,739 8.1 0.5 17.1 11.7 (0.3) 1,909,672 286,466

FY13E 2,234,662 816,121 555,550 825,239 37,752 1.8 (3.0) 5.0 5.0 (5.0) 1,932,983 301,679

FY14E 2,410,041 856,927 622,216 891,258 39,640 7.8 5.0 12.0 8.0 5.0 2,072,635 337,406

Exhibit 12: Angel vs consensus forecast

Angel estimates FY13E FY14E 7,466 8,290 4.8 5.6 Consensus FY13E FY14E 7,497 8,380 4.5 5.5 Variation (%) FY13E FY14E (0.4) (1.1) 6.7 2.8

Total op. income (` cr) EPS (`)

Source: Bloomberg, Angel Research

Exhibit 13: One-year forward P/E band

(`) 100 90 80 70 60 50 40 30 20 10 0 Share Price (`) 6x 9x 12x 15x

Exhibit 14: One-year forward P/E chart

(x) 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 One-yr forward P/E Three-yr average P/E

Feb-06

Dec-08

Mar-04

Mar-05

Dec-09

Jan-07

Apr-03

Jan-08

Nov-10

Nov-11

Oct-12

Jul-09

Jul-10

Jul-11

Jan-10

Jan-11

Apr-10

Apr-11

Jan-12

Oct-09

Oct-10

Oct-11

Apr-12

Jul-12 Apr-12

Source: Company, Angel Research

Source: Company, Angel Research

Exhibit 15: One-year forward EV/EBITDA band

(` cr) 6,000 5,000 4,000 3,000 2,000 1,000 0 EV (` cr) 4x 6x 8x 10x

Exhibit 16: Two-wheeler stocks performance vs Sensex

TVSL 500 450 400 350 300 250 200 150 100 50 0 HMCL BJAUT Sensex

Mar-08

Mar-09

Mar-10

Mar-11

Sep-08

Sep-09

Sep-10

Dec-08

Mar-04

Mar-05

Dec-09

Jan-07

Apr-03

Jan-08

Nov-10

Nov-11

Source: Company, Angel Research

Feb-06

Oct-12

Source: Company, Angel Research

November 1, 2012

Sep-11

Oct-12

Oct-12

TVS Motor Company | 2QFY2013 Result Update

Exhibit 17: Automobile - Recommendation summary

Company Ashok Leyland Bajaj Auto Hero MotoCorp Maruti Suzuki Mahindra & Mahindra Tata Motors TVS Motor Reco. Buy Neutral Neutral Neutral Accumulate Buy Buy CMP Tgt. price (`) (`) 24 1,845 1,905 1,455 899 267 39 30 986 316 45 Upside (%) 27.9 9.6 18.4 16.0 P/E (x) FY13E 10.9 17.0 16.1 22.0 16.4 6.9 8.1 FY14E 8.6 15.0 14.6 15.4 14.3 5.9 6.9 EV/EBITDA (x) FY13E 5.5 11.7 8.4 11.4 9.5 3.8 3.4 FY14E 4.7 9.9 7.0 7.6 7.9 3.2 2.8 RoE (%) FY13E 13.3 46.2 48.3 11.9 24.3 32.6 18.2 FY14E 15.6 41.6 41.9 15.1 23.4 28.8 18.7 FY12-14E EPS CAGR (%) 14.1 7.3 9.7 36.6 15.9 11.6 3.5

Source: Company, Angel Research

Company background
TVS Motor (TVSL), a flagship company of the TVS Group, is the third largest 2W manufacturer in India. The company is present across the motorcycles, scooters and mopeds segments, having a market share of ~8%, ~22% and 100%, respectively. The company successfully ventured into the 3W segment in FY2009 and garnered a ~5% market share as of March 31, 2012. The company has three manufacturing facilities in India, located at Hosur (Tamil Nadu), Mysore (Karnataka) and Solan (Himachal Pradesh) with 2W and 3W capacity of 2.75mn and 75,000 units, respectively. TVSL is also the second largest exporter of two-wheelers in the country.

November 1, 2012

TVS Motor Company | 2QFY2013 Result Update

Profit and loss statement (Standalone)

Y/E March (` cr) Total operating income % chg Total expenditure Net raw material costs Other mfg costs Employee expenses Other EBITDA % chg (% of total op. income) Depreciation & amortization EBIT % chg (% of total op. income) Interest and other charges Other income (% of PBT) Recurring PBT % chg Extraordinary income/(exp.) PBT Tax (% of PBT) PAT (reported) ADJ. PAT % chg (% of total op. income) Basic EPS (`) Adj. EPS (`) % chg FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E 3,739 14.2 3,552 2,783 111 205 453 187 94.9 5.0 103 84 6,824.8 2.3 65 12 40.4 31 (12.1) 2 30 0 0.1 31 29 872.9 0.8 0.7 0.6 872.9 4,430 18.5 4,243 3,137 133 248 724 187 0.4 4.2 103 85 1.3 1.9 75 67 61.7 76 144.9 (32) 108 (12) (11.0) 88 120 306.6 2.7 1.9 2.5 306.6 6,288 41.9 5,896 4,614 171 327 784 392 109.2 6.2 107 285 235.5 4.5 72 36 14.1 248 225.7 (4) 252 54 21.2 195 199 65.7 3.2 4.1 4.2 65.6 7,126 13.3 6,657 5,261 202 370 823 469 19.7 6.6 118 352 23.5 4.9 57 22 6.9 316 27.6 316 67 21.3 249 249 25.3 3.5 5.2 5.2 25.3 7,466 4.8 7,006 5,524 220 396 866 459 (2.2) 6.2 128 331 (5.8) 4.4 61 25 8.4 296 (6.6) 296 68 23.0 228 228 (8.5) 3.0 4.8 4.8 (8.5) 8,290 11.0 7,764 6,126 245 439 953 526 14.5 6.3 137 388 17.2 4.7 60 27 7.6 355 20.1 355 89 25.0 266 266 17.0 3.2 5.6 5.6 17.0

November 1, 2012

TVS Motor Company | 2QFY2013 Result Update

Balance sheet statement (Standalone)

Y/E March (` cr) SOURCES OF FUNDS Equity share capital Reserves & surplus Shareholders Funds Total loans Deferred tax liability Other long term liabilities Long term provisions Total Liabilities APPLICATION OF FUNDS Gross block Less: Acc. depreciation Net Block Capital work-in-progress Goodwill Investments Long term loans and advances Other noncurrent assets Current assets Cash Loans & advances Other Current liabilities Net current assets Misc. exp. not written off Total Assets 1,865 869 996 40 478 894 42 350 502 619 275 75 1,864 1,909 953 956 27 739 965 101 354 511 734 231 30 1,983 1,972 1,035 938 57 661 96 1,106 6 301 799 1,086 19 1,771 2,154 1,129 1,026 53 931 53 1,078 13 247 819 1,110 (31) 2,031 2,324 1,257 1,068 58 931 53 1,234 63 299 872 1,127 107 2,216 2,495 1,394 1,101 62 931 53 1,510 159 332 1,019 1,277 233 2,381 24 786 810 906 148 1,864 24 842 865 1,003 115 1,983 48 952 999 633 96 43 1,771 48 1,122 1,169 715 98 49 2,031 48 1,282 1,330 740 98 49 2,216 48 1,477 1,524 710 98 49 2,381 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

November 1, 2012

TVS Motor Company | 2QFY2013 Result Update

Cash flow statement (Standalone)

Y/E March (` cr) Profit before tax Depreciation Change in working capital Others Other income Direct taxes paid Cash Flow from Operations (Inc.)/Dec. in fixed assets (Inc.)/Dec. in investments Other income Cash Flow from Investing Issue of equity Inc./(Dec.) in loans Dividend paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in cash Opening Cash balances Net cash credit adjustment Closing Cash balances FY2009 FY2010 FY2011 31 103 (29) 66 (12) (0) 160 (88) (139) 12 (215) 240 19 (226) 33 (22) 4 (60) 42 76 103 103 112 (67) 12 339 (30) (262) 67 (225) 97 33 (102) 28 142 42 83 101 248 107 (67) 35 (36) (54) 234 (93) 78 36 20 24 (295) 60 (218) (428) (174) 101 (79) 6 FY2012 FY2013E FY2014E 316 118 63 33 (22) (67) 441 (177) (270) 22 (425) (72) 72 (150) (150) (135) 6 (142) 13 296 128 (83) (25) (68) 247 (175) 25 (150) 25 72 (47) 50 13 63 355 137 (31) (27) (89) 346 (175) 27 (148) (30) 72 (102) 96 63 159

November 1, 2012

10

TVS Motor Company | 2QFY2013 Result Update

Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage (EBIT / Int.) 0.5 2.1 1.3 0.2 0.9 1.1 (0.0) (0.1) 3.9 (0.2) (0.5) 6.2 (0.2) (0.6) 5.5 (0.2) (0.7) 6.4 2.0 36 13 53 21 2.3 26 17 51 15 3.2 24 14 49 4 3.5 28 13 53 (1) 3.3 30 13 53 (0) 3.4 32 13 52 3 4.8 0.9 3.6 4.4 0.9 14.3 15.2 16.1 21.3 18.5 17.4 22.9 15.6 15.4 18.2 16.9 17.5 18.7 2.3 1.0 2.2 4.9 8.2 0.4 3.5 1.9 1.1 2.4 5.2 8.8 0.3 4.0 4.5 0.8 3.4 12.3 7.0 0.1 12.7 4.9 0.8 3.8 14.6 6.7 (0.1) 13.7 4.4 0.8 3.6 12.2 6.4 (0.2) 11.1 4.7 0.8 3.8 13.3 6.2 (0.2) 11.7 0.7 0.6 2.8 0.4 17.1 1.9 2.5 4.7 0.6 18.2 4.1 4.2 6.4 1.1 21.0 5.2 5.2 7.7 1.3 24.6 4.8 4.8 7.5 1.3 28.0 5.6 5.6 8.5 1.3 32.1 62.3 13.7 2.3 0.9 0.6 18.7 1.2 15.3 8.3 2.1 1.6 0.5 16.6 1.0 9.2 6.0 1.8 2.8 0.3 4.6 1.0 7.4 5.0 1.6 3.4 0.2 3.4 0.8 8.1 5.2 1.4 3.4 0.2 3.4 0.7 6.9 4.6 1.2 3.4 0.2 2.8 0.6 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

November 1, 2012

11

TVS Motor Company | 2QFY2013 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

TVS Motor Company No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

November 1, 2012

12