TVS Motors Q1 FY13 earnings: Volume growth subdued

The volume growth in the first quarter of the current fiscal was relatively subdued for TVS Motors that saw a dip of about 3% in the total units sold in the first quarter vis-a-vis the first quarter of the previous year. Its net turnover, eventually, has increased only marginally, by about 4% during this period.

However, given a high incidence of employee cost, the company's operating margins for the quarter that have shrunk by nearly 100 basis points year on year. Its employee cost as a percentage to sales has increased from 5.2% in Q1 FY '12 to 5.6% in Q1 FY '13.

Correspondingly, the company's net profit has declined by about 13% y-o-y. The equity markets, however, reacted positively to the company's stock that was up by about 0.13% by the end of the day's trade.

The investor confidence in the company was probably influenced by its announcement of aiming at a pan India presence by the end of the current year. The company has reportedly announced its plans to have 100 own workshops and 300 franchisee workshops in the country.

Given its strong presence in south India, the Mutual fund industry has also increased their stake in the company from less than 5% in Mar '12 to 6.7% as the end of the Jun '12 quarter. This is in fact the highest mutual fund shareholding in this company since Mar '08.