Among the other contenders in this space are Bajaj Auto's Pulsar, Honda's Unicorn and Hero Honda's Hunk. The Apache, which clocks monthly volumes of close to 8000 bikes and has been the Chennai-based firm's biggest success story in recent years, should be able to hold on to its share in a growing market.
Since the Rs 3,270 crore (Rs 32.70 billion) company formally split with Suzuki way back in 2002, TVS has had a pretty rough ride; apart from the Victor, which was a moderate success, only the Apache has been a winner.
As a result the company has continuously lost market share in the motorcycle market with Hero Honda and Bajaj Auto turning out some popular models especially in the entry and executive segments.
Hero Honda, with the lion's share in sub 125 cc segment and also gains in the premium space over the past year, now has a total share of 56 per cent and is the undisputed market leader.
Even between April 2008 and January 2009, when motorcycle volumes for the industry remained flat compared with the previous corresponding period, Hero Honda's volumes were up nearly 10 per cent.
The Rs 10,332 crore (Rs 103.32 billion) company is less dependent on financing schemes and was therefore not as badly impacted by high interest rates as peer Bajaj Auto. It also has a strong presence in rural markets, especially in the northern part of the country.
Bajaj Auto, for its part, has been struggling for about a year now - volumes dropped by about 24 per cent between April and January with launches such as the XCD not really taking off.
However, with several launches in the 125 cc plus segment, including the latest XCD 135cc, it should be able to make some inroads into this segment. That's important because this segment now accounts for 30 per cent of the market and according to industry watchers, the share could go up to 34 per cent.
Bajaj Auto, as part of its strategy, has been moving out of smaller 100cc bikes which, it feels, are not profitable enough. That's probably why in January it sold fewer small bikes than TVS.
Without too many popular models, TVS' volumes came off by 8 per cent between April and January, on a lower base. The firm's share across the smaller categories is way below that of Bajaj Auto, though its bigger bikes have been faring better - volumes between April 2008 and January 2009 have risen 67 per cent over the previous corresponding period, again on a low base.
The poor volumes are hurting TVS's financials - the firm posted a net loss of Rs 1 crore (Rs 10 million) in the December 2008 quarter, with sales falling by 2 per cent to Rs 869 crore (Rs 8.69 billion).
The firm's operating profit margins, at 5.5 per cent, are way below those of Hero Honda's 14.5 per cent and were even lower in previous quarters.
In 2009-10, sales for Hero Honda and TVS are expected to increase by about 11 per cent while for Bajaj Auto, analysts are pencilling in flat numbers.
Since net profits for Hero Honda are expected to go up by about 12 per cent in 2009-10, the stock, which has been an outperformer over the past year, justifiably trades at a multiple of 12 times, estimated 2009-10 earnings.
However, it's difficult to understand why Bajaj Auto commands a multiple of 8 times when profits are expected to rise only marginally in 2009-10.
