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TVSL logged a healthy Q1, with 20% YoY revenue growth and stable margins QoQ at 12.5%, adjusted for the lumpy PLI benefit recognition in Q4FY25. While domestic industry performance was muted in Q1, TVSL expects improvement in Q2, aided by the upcoming festive season and early onset of monsoons – with ongoing improvement in exports markets to continue (including key African markets, where the worst is now behind). TVSL’s enduring outperformance, reflected in the ongoing market-share gains across growth categories (premium motorcycles, scooters, exports, EVs), coupled with the recent and upcoming product actions (eg new E2W, E3W launch, and rollout of superpremium motorcycles under the Norton brand from H2), keep us positive on the stock. We trim FY26E/27E EPS by ~1%/2% and build-in 14%/19%/21% revenue/EBITDA/core EPS CAGR over FY25-28E, while maintaining BUY with unchanged SoTP-based TP of Rs3,100 (30x Jun-27E core PER, rolled over + Rs193 for the captive finance arm).

Strong revenue performance; PLI-adjusted margin stable QoQ

Revenue grew 20% YoY to Rs100.8bn (in-line) led by 17% YoY volume growth, with ASPs flattish QoQ. EBITDA grew 32% YoY to ~Rs12.6bn (largely in-line); reported margin of 12.5% was stable vs Q4 when adjusted for the lumpy recognition of PLI benefit in Q4 (PLI benefit at 0.5% of sales). PAT grew 35% YoY to Rs 7.8bn (Emkay: Rs8.0bn).

Earnings call KTAs

1) The management guided to sustained ahead-of-industry growth across domestic, exports and ICE/EVs, led by product actions and the strength of TVSL’s brands. 2) Rural demand was slower than that in urban, in Q1, albeit expected to improve in Q2 owing to early onset of monsoons, upcoming festive season, repo rate-cut, and rising ‘scooterization’. 3) African markets are stabilizing, with the worst behind even as LatAm and Asian markets continue to grow; LatAm is a focus market for TVSL, despite its late entry. 4) The first products under the Norton brand to be launched in Q3/Q4, with availability in Europe from the next Q1; India to also be a strategic market with premium but accessibly priced range; targets 3 launches and 3 variants under Norton initially. 5) Recently launched E3W faring well and poised to soon cross the 2k/mth run-rate; network covers 70% of the market here; targets being a prominent player in the category by endFY26. 6) TVSL has lined up new E2W and E3W launches in coming months; E2W and E3W are both gross-margin positive; PLI benefits for E-3W to start from Q2; progressively, the entire portfolio will qualify for PLI, based on eligibility. 7) Expects 0.5% commodity headwind in Q2, largely due to steel price increase; has taken a small price increase to help mitigate this. 8) Supply of rare earth magnet is challenging; using locally available magnets in the short term, while simultaneously working on long-term solutions like magnet-less motors and alternative sourcing. 9) FY26 investment spends to be akin to FY25, with capex at Rs16-17bn amid multiple product launches. 10) Confident of gradual turnaround in the Europe EV bike business once the environment improves. 11) Q1 EV/spares/exports revenue at Rs10bn/9.9bn/24.9bn, respectively.

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