Buy TVS Motor; target of Rs 175: Sharekhan

The TVS management is looking to leverage on a complete scooter portfolio in FY2015. It also expects motorcycle volumes, which were lacklustre in FY2014, to pick up in FY2015 aided especially by the launch of the TVS StaR City +. The momentum in three-wheeler exports is expected to continue and the company’s domestic three-wheeler volumes are expected to rise with the launch of the diesel variant. Since our initiation on TVS (on May 2, 2013) the stock has delivered an impressive return of 55 percent. Our positive stance on the company was due to its strong product offering in the scooter segment and an expectation of margin improvement going forward. We remain positive on the stock and expect the company to deliver earnings CAGR of 28 percent over FY2014-17. We are taking a long-term view on the stock and retaining a Buy recommendation on it with an 18-month revised price target of Rs175 (vs Rs142 earlier) based on 15x FY2017E earnings.

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