TVS Srichakra Ltd. (TVSSL), a part of TVS Group, is a leading manufacturer of two
and three-wheeler tyres with a 25% market share. Two-wheeler demand growth
(~16% yoy YTD) continues to be insulated from the current slowdown in the
automobile sector. Given this growth and increased installed capacity of
automotive tyres by 170% to 3.3cr units over FY2009-11, TVSSLs volume is
expected to grow at a CAGR of 11% over FY2011-13E. Also, the promoters have
increased their stake in the company from 39.5% in June 2007 to 44.4% in June
2011, demonstrating their confidence in the companys future growth outlook.
We recommend Buy on TVSSL with a target price of Rs468, based on a target PE of
5x for FY2013E.

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