TVS Motor Q2 net profit revs up 29% on higher sales, better margins

TVS Motor Company said Thursday consolidated net profit for the second quarter jumped 29% thanks to higher sales even though rising commodity costs and a chip shortage caused concern.

Net profit for the July-September quarter rose to Rs 234.37 crore from Rs 181.41 crore a year earlier, the maker of Apache bikes said.

Consolidated revenue climbed 22% to Rs 5,619 crore in the second quarter as against Rs 4,605 crore in the corresponding period of 2020-21.

The company said it posted its highest-ever EBITDA of Rs 562 crore during the quarter, as against Rs 430 crore a year earlier, despite various challenges in terms of increase in commodity costs, scarcity of containers for international business and shortage in semiconductors through significant cost reduction initiatives and growth in revenue.

The company’s cost of materials consumed jumped Rs 4,406.27 crore from Rs 3,648.28 crore a year earlier. It also said that a focus on working capital management and improved operating performance helped it to generate operating free cash flow of Rs 1,090 crore during the quarter.

TVS Motor competes with the likes of larger rivals Bajaj Auto and Hero MotoCorp as well as the local units of Japan’s Honda and Yamaha. The company’s shares have climbed 18.4% year to date even after falling 13% since touching a one-year high of Rs 665.70 apiece in May this year. The shares ended 0.44% down at Rs 576.55 apiece on Thursday.

TVS Motor Q2: Other key highlights

1) Profit before tax grew 41% to Rs 377 crore from Rs 267 crore during the quarter ended September 2020.

2) TVS recorded operating EBITDA margin of 10% during Q2 as against 9.3% a year earlier.

3) Total two-wheeler sales rose 4.3% to 8.70 lakh units from 8.34 lakh units in the second quarter of 2020-21.

4) Two-wheeler export sales grew 46% compared with Q2 of the last year.

5) Motorcycle sales jumped to 4.39 lakh units from 3.66 lakh units.

6) However, scooter sales fell a tad to 2.66 lakh units from 2.70 lakh units.