Merill Lynch cuts TVS Motor price target by 15%

CHENNAI: Foreign brokerage Bank of America Merrill Lynch has cut its price target on TVS Motor by 15% to Rs 45, citing stronger than anticipated headwinds of slowdown and competitive pressures.

The brokerage has an underperform rating on the stock. The TVS stock closed Wednesday at Rs 33 on the Bombay Stock Exchange.

The brokerage cut its standalone EPS estimates for FY 13 and FY14 by 35% and 38% to Rs 4.5 and 4.7 respectively.

Bank of America Merrill Lynch said the company's volume would be under pressure on increased competition in scooters post expansion of Honda and new launch of Hero and also due to delay in launch of Victor commuter bike.

It also expects interim results to disappoint, especially because of the performance of TVS' Indonesian subsidiary.

The brokerage also expects the company's exports, which have grown at a 30% CAGR in the past two years, to slow down.

"We expect this segment to reverse trends due to import curbs in key destinations eg Sri Lanka, and new competition, mainly African markets," it said.