TVS Motor found encouraging early pickings on Monday after it declared a 62% rise in Q4 net profit.

The scrip of the Chennai-based two-wheeler maker jumped up 4.34% to Rs 417 by 10:20 IST today as a result of its numbers beating expectations. Even so, just 120 shares were traded on the counter by that time.

After market hours Friday, TVS Motor said that fourth quarter ended 31 March 2003 net profit jumped 62% to Rs 37.54 crore from Rs 23.19 crore in the corresponding period of the previous year. Net sales increased by 15% to Rs 633.28 crore (Rs 6.33 billion) from Rs 577.15 crore (Rs 5.77 billion) in MQ 2002.

capitalmarket.com projections - net profit of Rs 25-32.5 crore - were bested. However net sales were below expectations.

The results come as a pleasant surprise at a time when the two-wheeler industry has reached a sort of plateau. The 10.1% rise in operating profit margin is particularly impressive. It has come about mainly due to the sharp savings in terms of raw material expenditure.

For the full year ended 31 March 2003, TVS registered a massive 137% rise in net profit to Rs 127.65 crore (Rs 1.27 billion) on a 40% jump in net sales to Rs 2,705.09 crore (Rs 27.05 billion). The company has also announced a Rs 5 per share dividend for the full year.

The company's indigenously developed and successful model "Victor" is propelling the company forward in terms of operational and financial performance. The year was marked by a more than 300-points rise in operating profit margin.

Better localisation, value engineering, strategic buying and better logistics are all contributing factors to the company's performance. During the year, TVS sold 11.19 lakh units (including exports). Domestic motorcycle sales increased by 59% to 7.1 lakh units during the period. In contrast, the industry growth rate in motorcycles during the year was 28%. The company sold 1,52,492 scooters and 2,45,684 mopeds in the domestic market. While scooter sales gained by 7%, moped sales declined by 8%. In comparison, industry-wide scooter sales were lower by 8% and industry-wide moped sales were down by 19%.

Motorcycle sales have been growing faster than that of competitors. However, sales growth over the next few months are crucial as they will be an indicator of growth momentum. The company recently announced that it would be investing close to Rs 600 crore (Rs 6 billion) in the next three years towards expansion efforts.

But it's high time that TVS Motor shifts from its emphasis on the Victor and looks for some other successes as well. It is not likely that the company wishes to be looked upon as a one-model-stable at a time when growth in the two-wheeler segment is believed to be reaching saturation point.

Two variants of the Victor will be launched in August 2003. TVS Motor is also foraying into the three-wheeler segment – it is considering setting up a new unit on the surplus land available at the present plant situated in Mysore. Analysts feel the success of the new plans will decide the movement of the company's stock price as well as its financials in future.

The promoters holding in TVS Motor decreased to 58.81% in FY'03 from 58.99% in FY'02.