Buy TVS Motor, target Rs 725: Sharekhan

Sharekhan has a buy call on TVS Motor Company Ltd. with a target price of Rs 725. The current market price of TVS Motor Company Ltd. is Rs 557.45. Time period given by the brokerage is a year when TVS Motor Company Ltd. price can reach the defined target.
TVS Motor Company Ltd., incorporated in 1992, is a large-cap company with a market cap of Rs 26844.80 crore.

Investment rationale by Sharekhan
Cut estimates as we lower margin assumptions; maintain Buy with revised PT of Rs 725; recent correction largely factor cost headwinds: We have lowered our marginestimates for both FY2019 and FY2020 by 150 bps and 140 bps respectively given the lower than expected margin in Q4FY2018 and headwinds of higher raw material and employee costs and intense competitive pressures. Consequently, we have cut our FY2019 and FY2020 estimates by 16% and 12% respectively. TVSM stock has corrected by 10% in the last one month largely capturing the cost headwinds. We thus retain Buy rating on the stock with a revised PT of Rs 725 (earlier PT of Rs 825).