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Margins steady; market share gain, a positive

TVS Motors’ (TVSL IN) Q4 EBITDA margin came in at 13.1%, up 60bps YoY, led by strong operating performance. EBITDA margins were slightly above estimates. TVSL expects growth momentum in the domestic 2W industry to continue and anticipates single -digit growth in FY27 for industry with TVS expected to outperform . The company expects commodity pressure to have a 3 – 5% impact going forward, of which nearly 35% has been mitigated through price hikes , while remaining impact to be addressed via product mix improvement and cost reduction. TVSL continues to remain among companies with highest earnings growth within Auto OEM space. Continued domestic market share gains and export growth outperformance should act as key stock triggers, despite lingering uncertainty over industry demand amid the prospect of rising fuel prices. We maintain Accumulate with TP revised to INR 4,1 73, based on P/E of 3 4x (36x earlier) June ’28E EPS as we roll forward .

Expect single-digit growth in FY27, TVSL likely to outperform:

TVSL expects the domestic two - wheeler segment to grow in single -digit in FY27. While the economy category is expected to face challenges, the company expects growth outperformance in scooters ICE, EVs and premium and super premium MC . Regarding exports, the management indicated gradual recovery in Africa, LATM and select Asian markets as dealer inventory normalizes and macro conditions improve after prolonged weakness in the past quarters. TVSL is gearing up to launch Norton in Q2, with select motorcycles to be made in India to improve cost competitiveness and aid localization . High - end models will be produced at the Solihull facility in the UK

Commodity inflation and supply chain disruption to hit near-term margins:

The management indicated that commodity inflation is expected to remain a near -term headwind in Q1FY27, with TVSL estimating a potential impact of 3 -5% of revenues driven by elevated input cost. While calibrated price hikes are expected to offset ~ 35% of the inflationary impact , TVSL intends to mitigate the balance via cost optimization initiatives and scale benefits (we believe favorable currency will be a key factor) . Also , TVSL flagged off temporary supply chain disruptions in late March and April arising from elevated gas and energy cost and labor shortages at tier 2 suppliers. International logistics challenge continue s to persist with lead times increasing by 15%, although the management expects supply and domestic channel inventory to normalize by May en d/June.

Maintain Accumulate; TP pared to INR 4,173:

TVSL is a perfect play on: a) a consistent rise in blended domestic 2W market share (Vahan retail market share up 90bps YoY to 1 9.6% in Q4FY26, b) likely outperformance in 2W industry growth , c) continu ed outperformance in exports growth and d) potential for structural margin rise. Expect a revenue CAGR of 1 6%, an EBITDA CAGR of 19% and an EPS CAGR of 22%, with margin s expansion of 60bps, in FY2 6- 28E (EBITDA/ vehicle from INR 10.3k in FY26 to INR 11.7k in FY28E) . We value TVSL on 3 4x (36x earlier) June FY28 E EPS and assign ~INR 107 to TVS Credit Services. We maintain Accumulate on TVSL considering near -term headwind on commodity cost inflation . We cut our FY27E -28E estimates by 6 -8% with TP pared to INR 4,173 from INR 4,486 earlier, as we roll over our valuation base to June FY28E (TVSL will continue to outperform the industry in FY26 -27, and remain among the compan ies to post highest earnings growth within auto OEMs). We introduce FY29 E estimate.

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