TVS Motor posts sharp rise in earnings
India's No 3 two-wheeler maker, TVS Motor Co, posted a sharp rise in first quarter profit riding booming sales on higher demand for motorcycles, and announced a bonus issue of shares, sending its shares soaring.
"We are in a very bouyant market right now. The (motorcycle) industry has grown in the first three months by about 30 percent," H.S. Goindi, president, marketing, told Reuters on Wednesday.
TVS Motor's quarterly net more-than-doubled to 403.78 million rupees compared with 181.2 million rupees in the same period last year. Sales rose to 13.7 billion rupees from 9.75 billion rupees.
Total two-wheeler sales grew 31.4 percent in April-June to 460,000 units from 350,000 in the previous year.
After depressed sales in the last half of 2008 and early months of 2009, demand for automobile sales has been on a rising trajectory as a resilient Indian economy bounced back from a global depression.
TVS, along with larger peers Hero Honda and Bajaj Auto has seen rising sales this year as the rapidly expanding economy continued to pull buyers.
"The economy is doing well. And right now, things seem to be very good for the industry. However we should watch out for the monsoon," Goindi said.
Government and weather officials said the country's crucial June-September monsoon rains have improved marginally, reducing the gap to 15 percent below normal so far in the season from 16 percent until Monday.
TVS Motor would be spending around 1.75 billion rupees by March 2011 to ramp up capacity to meet growing demand.
Rising commodity prices earlier in the year forced TVS Motor to raise prices by about a percent in June, but it would wait for another 2-3 months before considering another hike, Goindi said.
"Indications are they (input costs) may soften. Let us wait for the next 3 months and then decide on the impact".
The company's board on Wednesday recommended a 1-for-1 bonus issue sending shares soaring to a life high of 137.2 rupees. Shares later closed at 128.55 rupees, still up 5.76 percent.