Emkay Global has retained a sell rating on TVS Motors, owing to near-term weakness in both overseas and domestic markets.

The target price of Rs 291 (Rs 390 earlier) is based on 19 times FY22E EPS (20 times earlier) and value of TVS Credit Services at Rs 35/share.

Demand in overseas markets such as the Middle East, Africa and Latin America is likely to be adversely impacted in the near-term due to fall in global commodity prices and virus outbreak.

In comparison, domestic demand is affected by steep price increases due to BS-VI transition. The share price of the company moved down by -2.73 per cent from its previous close of Rs 311.05.

The last traded price is Rs 302.55.

Incorporated in 1992, TVS Motor has a market cap of Rs 14361.88 crore. Investment RationaleRecovery is expected to be gradual and only by end FY21.

The brokerage expects revenue growth at 6 per cent CAGR and earnings growth at 8 per cent CAGR over FY20-22E.

The earnings estimates have been reduced by 26 per cent/18 per cent for FY21E/F22E to factor near-term volume pressures.

The brokerage says valuations are still expensive in comparison to peers. FinancialsFor the quarter ended December 31, 2019, the company reported consolidated sales of Rs 4765.99 crore, down -3.92 per cent from last quarter sales of Rs 4960.27 crore and down -6.96 per cent from last year same quarter sales of Rs 5122.61 crore.

The company reported net profit after tax of Rs 158.44 crore in the latest quarter. Promoter/FII HoldingsPromoters held 57.4 per cent stake in the company as of the third quarter ending December 31, 2019,, while FIIs held 12.2 per cent, DIIs 20.4 per cent and public - others 10 per cent.