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CHENNAI: Analysts are divided over the impact of TVS Motor's move to significantly increase investments into its subsidiaries this year.

The Venu Srinivasan-run TVS Motor, India's No. 3 two-wheeler maker, has pumped in Rs 165 crore into its arms in the first six months of 2011-12. That's more than double of the Rs 74 crore it invested into its subsidiaries the whole of last year.

Pinc Research said, "The significant investment made by TVS Motor in group companies ia a cause of concern going forward." Angel Broking expressed a similar view.

Pinc pointed out that, "The increase in loan book due to investments in group companies has warranted a 20% hike in interest cost for FY13."

However, Nomura said TVS Motor's investments into its arms is likely to come down in the second half. That's because, it has already invested Rs 165 crore of the Rs 190 crore that it has planned for the year. "Investments in subsidiaries will likely come down significantly" in 2013, Nomura analysts Kapil Singh and Nishit Jalan said in their report. "This should help TVS reduce its debt levels and allay investor concerns on the company's balance sheet."

Both Pinc and Angel have a buy rating on TVS Motor.

The company's plan this year is to invest Rs 50 crore in its financing arm TVS Motor services, Rs 40 crore in TVS Energy and Rs 25 crore in Sundaram Auto components.

TVS Motor, maker of Apache and Scooty two-wheelers, exceeded analyst expectations and posted a net profit growth of 40% in the recent Q2.

Source- Analysts mixed over TVS Motor's investing Rs 190 crore into its subsidiaries - The Economic Times