Buy TVS Motors Limited For the Target Rs. 2,936 by Choice Broking Ltd
TVSL Matches Revenue Estimates, 2W Market Share Reaches Six-Quarter High
* Q3FY25 standalone revenues at INR90,971Mn, (vs CEBPL est. INR91,952Mn), up 10.3% YoY and down 1.4% QoQ. Total volumes stood at 1,211,952 units, reflecting a 10.1% YoY increase and a 1.3% QoQ decline. ASP remained stable at INR75,061 during the quarter.
* EBITDA for Q3FY25 was reported at INR10,815Mn, (vs CEBPL est. INR11,034Mn), up 17.0% YoY and remained flat with improvement of 0.2% QoQ. Margin improvement was driven by lower raw material costs, offsetting higher staff and other expenses.
* PAT for Q3FY25 reported at INR610mn, (vs CEBPL est. INR6,185Mn), up 4.2% YoY and down 6.7% QoQ. EPS for Q3FY25 is INR13.0 down 6.7% YoY and up 4.2% QoQ.
Powering Ahead in the ICE Segment with Strong Growth: TVSL has outperformed the two-wheeler market, with a 5% growth in domestic ICE two-wheeler sales in Q3, compared to the industry's 1% growth. Internationally, the company saw a 26% increase in ICE sales. TVSL increased its market share to 18.7% in 2W segment, the highest in the last six quarters. Motorcycle share remained flat at 10%, but Scooter share rose to 27.9%, driven by premium offerings in both ICE and EV segments. To support these efforts, TVSL will invest approximately INR 17,000Mn by the end of the FY25. Investments are being made towards product development , new technologies, and the Norton brand, with the first Norton products expected by the end of the current fiscal year and additional launches in the next financial year.
Electrifying the Future with Strong EV Momentum: The EV segment remains a key growth driver for TVS, with a remarkable 57% increase in EV two-wheeler sales in Q3, with 76,000 units sold, compared to 48,000 units in the same quarter of the previous year. The popular iQube brand and the launch of the TVS King EV Max are driving this expansion. TVS is also increasing its dealership network, now with around 900 iQube dealerships, and expanding into international markets like LATAM and Morocco.
View and Valuation: We have revised our FY26/27 EPS estimates by +3.9%/-3.1%, reflecting the anticipated increase in other income as PLI benefits start taking effect from the next quarter. We reaffirm our ‘BUY’ rating with a revised target price of INR 2,936 (valuing at 34x FY27E EPS + INR 134 for TVS Credit)
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