The TVS-Suzuki scrip has moved down from the level of Rs 700 in end of `99 to Rs 215 now. What a steep fall. This is the period when many scrips in information technology moved the exactly other way. All goes to prove how serious is the judgement and evaluation business! TVS-Suzuki has been followed closely by most business analysts over the last few years. It is a good case study for business management schools. The technical analyst, who could point out the oncoming downtrend could look back with satisfaction. EPS has been on a steady climb from Rs 23 to Rs 35 in the three years to the 99 fiscal. Book value at Rs 107.68.In valuation terms the price should be attractive. But with the industry seeing intense competition, traders are unlikely to bite this scrip in the light of the recent news on the bidding farewell to `Shogun' and `Shaolin'.
Trying out new models is an essential game in the two wheeler market. In fact, Bajaj Auto is catching up with the motorcycle project as fast as it can now. It is a case study in not bringing out new products in anticipation of changing market ground earlier.
And predicting consumer preferences and designing a two wheeler is certainly not an easy job. It is price sensitive and has all the ingredients that every marketing manager would like to put his skills to test on. TVS has taken the decision to discontinue the production of the two models as sales failed to pick up. Actually it was dropping. It would have also entailed high cost to refurbish to put it in conformity with latest emission norms.
Marketing pundits would tell you that new launch failures are part and parcel of the marketing game. And it happens in high frequency in developed markets, where more launches are made. So TVS withdrawing the two products is nothing one should get depressed about. On the other hand the company had a good opportunity to learn. It is planning to introduce 11 new models in the next three yeaRs It is also working towards re-launching its 4-stroke scooter `Spectra', in addition to rolling out a new version of `Fiero' a new version of its latest offering. TVS is in the industry for the long haul and has not flinched from investing towards the future. It now plans to invest Rs 100 crore a year in the next three years to devise three new engine platforms and 11 new models.
The company is targeting to sell one million vehicles this year. Over the last six months the stock price has gone down by a little over 10 per cent. This indicates that the downside risk is limited. On the other hand there has been a volume pick up on August 8, when the price dipped to Rs 207. Those with surplus cash should consider investing 3 per cent of their portfolio here now for the long haul.
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