Add TVS Motor Company For Target Rs.4,250 by Choice Institutional Equities Ltd
Domestic leadership and accelerating EV scale-up underpin growth:
TVSL delivered another robust quarter, with revenue growing 38% YoY and standalone PAT increasing 51% YoY, supported by strong operating performance. Domestic 2W volumes grew 21% YoY, outpacing the industry average (~13%), driven by sustained traction in scooters, premium motorcycles and electric vehicles. The scooter portfolio (ICE + EV) now contributes ~40% of total volumes, reflecting continued success of Jupiter, Ntorq and iQube, while iQube sales surpassed 1 million units, reinforcing TVSL's leadership in the fast-growing EV segment
We believe TVSL's consistent market share gains across domestic, exports and EVs demonstrate its superior execution, diversified growth drivers and strengthening premium portfolio. We expect growth momentum to sustain, supported by capacity expansion, premiumisation, export recovery and new product launches. However, commodity inflation and elevated investments towards EVs and global expansion could moderate near-term margin expansion
View and Valuation:
We increase our FY27E/FY28E EPS estimate by 5.7%/8.9%, respectively, considering better-than-expected Q1FY27 performance, faster EV scale-up, continued premiumisation and strong growth in exports. Accordingly, we increase our target price to INR 4,250, valuing the company at a 34x (maintained) P/E multiple based on FY28E EPS and assign a value of INR 101 per share to TVS Credit. Accordingly, we maintain our ‘ADD’ rating on the TVSL stock
TVSL: Outperformed our estimate across the board
* Revenue was up 37.8% YoY and up 8.5% QoQ to INR 1,38,961 Mn (vs CIE est. of INR 1,32,494 Mn) led by 27.7% YoY growth in volume and 8.0% YoY growth in ASP
* EBITDA was up 41.2% YoY and up 5.9% QoQ to INR 17,794 Mn (vs CIE est. of INR 16,164 Mn). EBITDA margin was up 30 bps YoY and down 31 bps QoQ to 12.8% (vs CIE est. of 12.2%) * APAT was up 51.4% YoY and up 17.7% QoQ to INR 11,740 Mn (vs CIE est. of INR 9,563 Mn)
Exports remain a structural growth driver:
TVSL's international business delivered record Q1FY27 performance, which grew by 32% YoY, led by continued strength in Africa and expanding presence in Latin America. In parallel, Norton is progressing as planned, with production underway for four premium motorcycles, supporting long-term growth, brand equity and margin expansion.
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