JM Financial BSE -1.61 % has maintained 'Buy' rating on TVS MotorBSE 0.60 % with a target price Rs 49. Since Jan 2011, the stock has traded at an average one-year forward P/E multiple of c.10x.
Historically, TVSL's earnings growth has been more muted due to limited product range in motorcycles, lack of focus in scooters, weak network and lower scale.
"Given the concerns, we value TVSL at a 1-year forward multiple of 9x - at c.40% discount to target multiple for HMCL/BJAUT and 10% discount to its long term average" said JM Financial in a report. In terms of price/book, TVSL is currently trading at multiple of 1.4x FY14E. TVSL is the only company in India that has presence across motorcycle , scooter, moped and the three-wheeler segments.
Although, TVSL has underperformed motorcycle and scooter market in the last decade, new model launches along with aggressive refreshes could help revive volume growth in medium to long run. In the mopeds segment, TVSL remains the only player but lack of growth triggers in long term is a concern.
While entry in three wheelers has helped TVSL diversify its business model, lack of growth visibility and increasing competition from SCV segment remains a worry.
