TVS Motor Q1 Results Review - Margins Resilient Despite Inflated Operating Expenses: Yes Securities

Yes Securities Report

TVS Motor Company Ltd.'s Q1 FY25 results were in line operationally as margins continues to be resilient at 11.5% (+90 bp YoY/ +20 bp QoQ). Gross margin expanded ~320 bp YoY (+140 bp QoQ) at 28.6% led by favorable mix and sustained cost controls.

However, this was offset by higher staff and other expense due to increased variable cost linked to production (Rs 600 million) and brand/digital exp impact of Rs 1.2 billion.

Key operating metrics such as Ebitda/vehicle increased further to Rs 8,800/unit (+10.2% YoY/ +1.3% QoQ). The management indicated two new two-wheeler launches each in ICE and electric vehicles in Q2 FY25 and EV three-wheeler in FY25E.

The management indicated rural/semi-urban markets are performing better vs urban (we have been indicating the trend since last three-four months in our channel check note).

We continue to believe TVS Motor is better placed among two-wheeler OEMs both in ICE and EVs led by better product acceptability which should drive further market share gains. However, we would remain watchful of the competitive launches in the 125cc segment and market share impact thereof.

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