Overall volumes grew 12.2% y-o-y , +19.1% q-o-q to 802.1 thousand units. Realisations rose 5.2% y-o-y, +0.4% q-o-q to `42.4 thousand. Net sales grew 18% y-o-y, +19.5% q-o-q to `3,390 crore. Reported EBITDA margin contracted 80bp y-o-y +50bp q-o-q to 6.2%, led by one-time GST compensation of `165 million, 50bp impact and pending discounts of BS3 at `60 million. Also, exhaustion of excise exemption at the Himachal plant had an impact of ~0.5% in Q1FY18. Including state government grant, recurring margins were still lower at 7.1%. PAT grew 6% y-o-y +2% q-o-q to `1.29 billion. TVSL targeting 1-1.5pp market share gain in FY18.
Maintains double-digit margin target by Q4FY18. BMW Alliance supplies at ~2k/month in Q1FY18 (as against 4.7k units in FY17). Taken price hike of `500- 1,000 per unit in Q1FY18; plans to take another 1% in H2 to fully pass cost inflation. Monsoon has been weak in south India. Normalisation of monsoon critical for revival of 2W demand, especially for mopeds.
Targeting Victor volumes of 20k per month, versus average of 7.5k in Q1FY18.For 2nd year in row, TVS topped JD Power Customer Satisfaction Index. We have cut our EPS estimates for FY18 and FY19 by 12.1% and 8.7%, respectively, as we factor in RM inflation and higher tax rates. The stock trades at 37.2x/22.6x FY18E/FY19E earnings per share. We maintain Buy with a TP of `612, ~20x Sep-19E EPS + `68/share for value in NBFC investment post 20% HoldCo discount.