TVS Motor (TVSL) monthly dispatches for Jan'11 were below our estimates primarily due to lower moped volumes. Total sales for the month of January were up by 30% YoY to 165k units as against our expectation of 173k units. The two wheeler sales were higher by 29% to 162k units aided by growth in the motorcycles and scooter segments. Motorcycle dispatches grew by 24% to report 67k units. Buoyed by the demand for Wego, scooter segment reported a growth of 60% to 41k units. The company will be launching the Wego in Tamil Nadu market in Feb'11 which is expected to further boost volumes. However, Moped volumes posted a subdued growth of 17% to 53k units. Domestic two wheeler volumes grew by 30% to 142k units and exports grew by 21% to 17k units. TVSL also dispatched 3,427 three wheeler units during the month.

We remain positive on the stock of the company. However, we are reducing our target multiple on the company to 14xFY12E standalone earnings from earlier 16x. We maintain `BUY' on the stock with revised target price of Rs82

Maruti Suzuki (MSIL) dispatches for the month of Jan'11 exceeded estimates with production levels higher than expected. The company had taken its annual plant maintenance shutdown effective losing three working days in January which is not entirely reflected in the dispatch figures. Overall dispatches grew by 14.7% YoY to 110k units. The A2 segment continued to outperform increasing 23.8% to 72k units. After a marginal dip in December, A3 segment (Dzire, SX4) volumes picked up increasing 27.4% MoM to 12k units. As per the management, the launch of Toyota Etios has not affected the demand for Dzire. The MPV segment volumes increased by 27.7% to 14k units. The retail sales for the month are in the range of 80k units. The company has partially refilled the dealer inventory which got liquidated in the month of Dec'10.

Exports continued to remain lack lustre declining 36% YoY to 9,321 units.

Despite healthy volume growth, we expect profitability of the company to be under pressure.

We maintain a `HOLD' recommendation on the stock with a target price of Rs1,368 discounting FY12E earnings 15x.