As net zooms 42% in Q1, TVS keeps brokerages bullish over growth

Several brokerage firms remain optimistic about TVS Motor Limited after the company reported a 42 percent jump in its net profit in the first quarter of FY24.

Jefferies believes that the company will be a key beneficiary of demand revival in export and domestic markets. Improving franchise provides more headroom for further margin expansion, it said. Analysts at Jefferies see a 39 percent compound annual growth rate (CAGR) in earnings per share (EPS) over FY23-25.

Analysts at Nuvama Institutional Equities said that the company’s market share has grown from 14 percent in FY18 to 16 percent in FY23. Multiple launches – such as Jupiter, Zest, Ntorq, iQube, Radeon and Raider – over the years have enabled volumes and market share gains. “We see FY25 share at 17 percent on a rising share of scooters and premium motorcycles. We expect outperformance in overseas markets with new products and better penetration,” the brokerage house said.

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Nuvama has retained a ‘buy’ rating on the stock with a target price of Rs 1,510, an upside of 15 percent on the July 24 closing price.

TVS Motor holds an electric two-wheeler (E-2W) market share of approximately 18 percent over the last six months. This market share is slightly higher than that in internal combustion engine (ICE) two-wheelers. This success gives confidence that TVS is better positioned for the transition to electric vehicles (EVs) compared to its competitors.

To strengthen its position in the EV market, TVS has collaborated with BMW to create a joint platform for EV development and invested in e-mobility firms like Swiss e-mobility group, EGO Corporation, and Ultraviolette.

A series of product launches, including the TVS Raider 125 and the TVS Jupiter 125 in the last fiscal may add to the growth momentum. Its newly introduced Ronin has been well received by customers. According to the management, a slew of products are expected in FY24.

Nomura predicts that a strong product mix across segments will help drive stock prices.

While Goldman Sachs has a ‘neutral’ rating on the stock, it says wholesale will continue to follow the trend in the rest of FY24. Choice Equity also holds a ‘neutral’ rating as it suggests that the withdrawal of subsidies would moderate the EV transition in FY24.

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