TVS Motor Q3 Results Review - Mixed Bag Performance: Yes Securities

Yes Securities Report

TVS Motor Company Ltd. Q3 FY24 results were mixed given revenue/Adjusted profit after tax came in line while Ebitda missed our estimates by ~5% led by higher ad-spends due to festive.

Gross margin expanded ~180 basis points YoY (+30 bp QoQ) at 26.3% led by benign raw material. Key operating metrics such as Ebitda/vehicle increased further to Rs 8400/unit (+12.1% YoY/ +0.3% QoQ).

Going ahead, margin expansion to continue given soft raw material and favorable mix. With iQube production run-rate ramped up to ~25,000 units/month and more launches planned (in 5- 25 kwh capacity, both in two-wheeler and three- wheeler segments), TVS Motor continues to focus on EV ramp-up.

We continue to believe TVS Motor is better placed among two-wheeler original equipment manufacturers both in ICE and EVs led by better product acceptability which should drive further market share gains.

In our view, Ebitda margins expansion to continue given raw material softening and price hikes.

TVS Motor currently trades at 37.1 times /29.2 times of FY25/FY26 EPS (versus Hero MotoCorp Ltd./ Bajaj Auto Ltd. of 17-22 times).

We believe, it should continue to trade at a premium as we expect EPS compound annual growth rate of ~24% over FY24-26E.

We believe sustained market share gains in domestic EV two-wheelers led by aggressive product pipeline, scope of external investments in to EV vertical are re-rating triggers.

We re-iterate TVS as our preferred pick among two-wheelers with 'Add' with revised target price of Rs 2,193 as we continue to value co at 30 times Mar-26 earnings per share plus Rs 102 value to TVS credit.

We upgrade FY25/FY26 EPS by 0.4-2.5% to factor in for higher other income.

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