Shares of TVS Motor Company hit an over four-year low of Rs 279, down 6 per cent, on the BSE on Wednesday on concerns that sales volume in the month of April could decline significantly due to the lockdown until April 14 amid the outbreak of coronavirus (Covid-19) pandemic.
The stock of the company, which primarily makes two-wheelers and three-wheelers, was trading at its lowest level since March 2016. In the past two months, it has tanked 40 per cent as compared to a 25 per cent decline in the benchmark S&P BSE Sensex.
Given the unprecedented lockdown in the nation, analysts at Dolat Capital expect March 2020 dispatches to decline steeply. They estimate two-wheeler and four-wheeler sales to dip by 45 per cent year on year (YoY) and commercial vehicle sales to decline by 70 per cent (YoY) as festive season Gudi Padwa and Navratri volumes were severely hit.
"In Q1FY21E, industry volumes may fall in the range of 40-50 per cent YoY, despite a low base. These two months of subnormal operations (15-25 days of complete closure, i.e., March-April 2020 and corresponding one month of gradual resumption of work) may reduce overall H1FY21E earnings," the analysts said in a report.
“The small players like TVS Motor have a relatively heavy exposure to Covid-19 concentrated location which may witness longer lockdown period, causing a delayed turnaround in their volume growth story. The company will have little financial muscle to secure volume without incurring large hit to profitability,” said analysts at Antique Stock Broking in a auto sector update.
For the month of February, TVS Motor had reported a 15.4 per cent decline in total sales in at 253,261 units as against 299,353 units sold in the same month last year. The Covid-19 has led to the impact on supply of certain components for production of BS-VI vehicles, the company said.
At 10:59 am, TVS Motor was trading 4 per cent lower at Rs 285 on the BSE, as against a 3.5 per cent fall in the S&P BSE Sensex. A combined 1.2 million shares have changed hands on the counter on the NSE and BSE till the time of writing of this report.