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In Q2FY25, TVS Motors registered lower than expected performance on all fronts. Revenue for the quarter under review improved by 13.3% YoY basis to Rs.92.3bn (vs est. Rs.95.6bn) led by 14.3% YoY volume growth and 0.9% YoY de-growth in ASP. Operating profit jumped by 20% YoY to Rs.10.8bn vs est. of Rs.11.6bn and EBIDTA margin for the quarter expanded by 65 bps YoY/ 24bps QoQ to 11.7% vs est of 12.1%. Effort on reduction in RM to sales is commendable, despite increase in other expenditure and staff cost company able to manage the margin in upward direction. Management expects margin improvement to continue driven by cost reduction effort, product mix and geography presence. PAT increased by 23.5% YoY to Rs.6.63bn despite lower other income.

* New Product launches: The company has launched the all-new TVS Jupiter 110, which is receiving a very good response from the market. Also the all-new TVS Apache RR310, the flagship offering in the super premium sport motorcycle category, has been launched in two variants, including a build-to-order customized option. The company also has a well-planned product lineup for electric mobility, with more launches expected during the current financial year. TVS X, a super premium product, has been launched, with expectations of higher volumes and Pan India presence in the next quarters. The company is investing in product development, particularly for new segments and developed countries.

* EV portfolio: EV 2-wheeler sales increased by 31% compared to the same quarter last year. The government's long-term support for the EV program will help the industry grow, with visibility of two years. IQube has established a strong brand in the EV segment with its technology, features, and best-in-class quality.

* Exports: The company believes that India will emerge as a major export hub for EV 2- wheelers. In Latam, TVS is seeing growing opportunities, and the company is leveraging its products from both India and Indonesia to expand its market share. The Middle East and ASEAN regions also remain key export markets for TVS.

* View & Valuation: TVS Motors is working on to make more launches in ICE+EV segment in 2W&3W in coming quarters with a aspiration to expand in international market particularly in EV segment. Management expect to perform better than industry by new product launches, increase in customer reach and aggressive network expansion for E-2W (with new EV launches). Going forward recovery in the export market will also support healthy volume for the company. Further, cost reduction efforts will support the double-digit margin trajectory in the coming quarters as well. We maintain our BUY rating on the stock with TP of Rs. 2,759 (valuing at 34x Sep-FY27E EPS + Rs.157 for TVS credit).

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