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There is a lot a hoo-haa about TVS in the market as its been a market performer. The stock price has soared, but does the company have the capacity to become the next Eicher Motors ( as per Saurabh Mukherjea of Ambit Capital) ? I’m not so convinced.

Bajaj owns 49% of KTM – yay !

Volvo and Eicher own VEVCL – yay again !

TVS TIES up with BMW to manufacture and design sub 500 cc vehicles – hmmmmm !

Tying up is not quite the same thing as owning, now is it? TVS will probably just be a sweat shop for BMW. I find it wrong to compare TVS with Bajaj or  Eicher because, KTM is likely to displace Suzuki from the big 4 (Honda,Yamaha,Kawasaki&Suzuki) and Royal Enfield has a super sweetspot with the bikes have tremendous amount of emotional and aspirational value, with a cult following. What is TVS’s cult following ? The scooty !!!!!!!! *&%*^%^&$#

TVS has 4 products, mopeds( almost dead category), motorcycles (under constant threat of losing marketshare to the big 3) and scooters (Jupiter looks supremely promising) and the KING auto.

Apart from the products of which none have gained enough traction to push the companies margins to a double digit, the company has confusing subsidiaries in energy, power, spare parts, and consultancy services.

Why use a company which in itself, is just about able to manage to walk as a holding company ?

Last year the subsidiaries posted an operating loss of 71 cr. Luckily for the company they had a one time land sale profit from Indonesia of 92.78 cr.Otherwise, the subsidiaries are still in the red.

TVS has a low ROE, decent cash management policy and a manageable debt and a well respected Owner group. But is that enough to propel the company into another growth trajectory with Bajaj and Piaggio being fierce competitors in the 3 wheeler market and Honda, Hero, Bajaj, Yamaha and Suzuki in the lower mid size bikes and now with Harley, Triumph and Kawasaki launching 250cc bikes.

TVS may have a lot of things but it does not have carisma, and can it borrow the same from BMW ?

I doubt it.

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