TVS Motors - Buy

Our research team has analyzed the performance of TVS Motors in the past month has shown good accumulation and consolidation around 80-87 levels and is poised to jump sharply in the coming days.

Company Background :

TVS Motor Company Limited is a two-wheeler manufacturer in India. The Company manufactures a range of two-wheelers from mopeds to racing motorcycles. The Company’s products include domestic range of two-wheelers, three-wheelers and international range of two-wheelers. The Company’s motorcycles products include Apache RTR 180, Flame DS 125, Flame, TVS Jive, StaR City, Sports. 

The Company’s Variomatic Scooters products include TVS Wego, Scooty Streak, Scooty Pep+, Scooty Teenz. The Company’s Mopeds include TVS XL Super and TVS XL Heavy Duty.  The company has been posting good set of numbers QoQ the sales in the month of February 2014 has been quite impressive and the positive trend continues for Q4 of current fiscal.

TVS Motor Company Ltd announced its Q3 FY14 results on 29th January 2014. The company's Net sales increased by 3.48% and 12.96% on QoQ and YoY basis respectively. EBITDA increased by 15.41% on YoY basis. EBITDA Margin of the company increased from 5.87% to 6.00% on YoY basis. PAT excluding excp items increased by 17.49% and 31.17% on QoQ and YoY basis respectively.

Price Performance :

The stock jumped more than 50% during the last 4 month period and is now poised to scale newer heights.  From around Rs.60 levels it is hovering near 3 digit Rs.100 we expect a positive break out leading the stock to move beyond Rs.130 in coming weeks.  With the Q4 results likely to be released shortly indicating strong volume and revenue growth, punters have started accumulating this stock on all declines.

Recommendation :

We strongly recommend both the long term and short term investors to get into the stock on all declines, keeping a strict loss around Rs.87 and continue to hold for a target price of Rs.130

Raghav
Equity Research Analyst

Ravina Consulting
No.24 Pattamal Plaza
3rd Cross Kamannahalli
BANGALORE 560048

For Stock Advise + Ideasraghav@ravinaconsulting.comTalk / SMS 08105737966

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Pratibha Industries- BUY

Dear Smart Investors,

Pratibha Industries declared strong set of numbers for the quarter ended June '12, which were in line with SPA Securities' estimates. While PIL reported a topline growth of 55.4% to Rs5598 mn driven by strong execution of order book, sharp surge in interest and depreciation expenses restricted the net profit growth by 22.2% to Rs228 mn. Operating margins improved by 107 bps aided by its high margin water projects. Order inflow remained strong as PIL booked orders worth Rs15 bn leading to total order book Rs66 bn (3.5x TTM revenues), thereby ensuring healthy revenue visibility for the next couple of years. SPA retains their BUY recommendation on the stock with a target of Rs68.

Superior execution driving revenues

PIL reported strong revenue growth of 55.4% to Rs5598 mn in Q1FY13 on the back of 66.3% growth in the construction segment. The growth was led by strong execution of ongoing projects and ramp up of revenue recognition from Delhi Metro and Delhi Jal Board project. The manufacturing division continued to disappoint with 57.3% decline in revenues. 50% of the revenue was from water segment, 35% from Urban Infrastructure segment and balance from building segment.

Healthy margins

EBIDTA in Q1FY13 grew at faster pace by 67.7% to Rs821 mn largely on the back of 107 bps improvement in operating margins to 14.3% owing to execution of high margin water projects. Commencement of revenue recognition from some of the large projects bagged in the last financial year also aided in margin improvement.

Higher interest & depreciation expense dents profitability

Net profit grew at slower pace of 22.2% to Rs228 mn and PAT margins plunged by 111 bps to 4.1% in Q1FY13. This was led by sharp surge of 2.2x in interest expense to Rs432 mn due to increased borrowings & 50.1% increase in depreciation expenses to Rs65 mn.

Healthy order book provides sound revenue visibility

PIL has a robust and well diversified order backlog of ~Rs66 bn (3.5x its TTM revenues) as on June '12 with an average execution period of 30 months, which offers strong revenue visibility for PIL over the next couple of years. 40% of orders are from water space, 25% from urban infra and 35% are from building. Order inflow remained strong at Rs15 bn in the last quarter (from tunnelling and building segment) PIL has placed bid for several projects and is L1 in projects worth Rs22 bn.

Going forward SPA expects PIL to maintain an order inflow run rate of ~Rs40 bn in each of the next two years, which would lead to 23% CAGR in order backlog over FY12-14E.

Merger of Pratibha Pipes & Structures - On track

The merger process is on track and PIL had convened shareholders meeting on 5th June to approve the scheme. Now the scheme is under active consideration of Bombay High Court and the whole process is expected to take another 2-3 months for completion.

Outlook & Valuations

SPA remains positive on the infrastructure sector and PIL with proven track record & efficient project delivery mechanisms is expected to be one of the prime beneficiaries of emerging opportunities in the sector. With the expected economic recovery, SPA expects sharp rerating of the stock with market pricing in its focussed approach, strong order backlog and sustainable high margins.

At the CMP of Rs48, the stock trades at a P/E and EV/EBIDTA of 3.9x and 4.5x its FY14E earnings respectively

52 week Price Movements NSE

http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1345041939004&chddm=1128&chls=IntervalBasedLine&q=NSE:PRATIBHA&ntsp=0

Our Recommendation :
Buy on declines around Rs.45 for a target of Rs.68 holding period of 3-4 months.


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Smart Investor
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Ravina Consulting
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BANGALORE 560084

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