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TVS Motor pops 14% in 2 days; Margin expansion may continue, say analysts

TVS Motor reported a 4.2 per cent Y-o-Y increase in standalone net profit at Rs 618.5 crore, as against Rs 593.4 crore in Q3FY24.

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Tanmay Tiwary New Delhi

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TVS Motor shares have rallied 13.91 per cent in two days, including today’s gain of 8.64 per cent, following the company’s strong financial results for the third quarter of financial year 2025 (Q3FY25). 
 
TVS Motor reported a 4.2 per cent Y-o-Y increase in standalone net profit at Rs 618.5 crore, as against Rs 593.4 crore in Q3FY24.
 
Revenue increased 10.3 per cent Y-o-Y to Rs 9,097.1 crore from Rs 8,245 crore. The operational performance stood out, with Ebitda growing 17 per cent to Rs 1,081.5 crore, leading to a rise in Ebitda margin to 11.9 per cent (highest-ever)—up 70bps from the 11.2 per cent in Q3FY24.
 
 
The company also posted a 10 per cent increase in overall sales (2W, 3W) at 12.12 lakh units in Q3FY25, compared to 11.01 lakh units in Q3FY24. Electric scooter sales were particularly strong, surging 57 per cent to 0.76 lakh units in Q3FY25.
 
Given this, here’s what brokerages said about TVS Motor post Q3 results:
 
Emkay
 
TVS Motor reported a solid operational performance, with revenue rising 10 per cent Y-o-Y and margins expanding 20 bps Q-o-Q to 11.9 per cent, marking a fresh high. The company expects continued strong momentum in the domestic 2W industry, driven by rural recovery, and expects sustained recovery in exports. 
 
Product actions, such as the recently launched Jupiter 110cc scooter, the E-2W iQube portfolio, and the newly introduced E-3W, analysts believe, will help TVS outperform. The management highlighted further margin expansion potential through operating leverage, premiumisation, and cost control measures. 
 
Thus, Emkay remains optimistic about TVS’s positioning in high-growth categories like scooters, premium motorcycles, exports, and E-2Ws. They have slightly reduced FY25E EPS (due to lower other income in Q3), expecting a 27 per cent EPS CAGR from FY25E-27E. The rating remains ‘Buy’ with an unchanged target price of Rs 2,800.
 
Nuvama
 
TVS Motor’s Q3 revenue was in-line with expectations. Ebitda (excluding PLI benefit) remained slightly ahead of estimates. TVS has been gaining market share domestically and internationally, and Nuvama forecasts domestic market share to rise from 17 per cent in FY24 to 18 per cent by FY27E. 
 
Moreover, margin expansion is expected in subsequent quarters with PLI incentives accounted for. Therefore, Nuvama expects strong growth prospects driven by the ongoing 2W industry upcycle, market share gains in both domestic and international markets, and TVS's aggressive EV strategy. Revenue/EPS CAGRs of 11 per cent/21 per cent are projected for FY25-27E. The ‘Buy’ rating is retained with an unchanged target price of Rs 3,100.
 
JM Financial
 
TVS Motor reported an Ebitda margin of 11.9 per cent in Q3, 40bps above JM Financial’s expectations. Meanwhile, the 70bps Y-o-Y margin expansion was driven by a favourable product mix and cost reduction efforts. 
 
Analysts said the domestic 2W industry is expected to grow by a high single-digit Y-o-Y in FY25, driven by a rural demand recovery and a strong festive season. International demand is also picking up gradually. 
 
TVS plans to ramp up its EV business by launching new products (both E2W and E3W) and expanding its dealer network. Thus, JM Financial expects TVS to continue outperforming in terms of volume growth, with margin performance driven by premiumisation, higher operating leverage, and cost management. 
 
Considering this, JM Financial has maintained a ‘Buy’ rating with a target price of Rs 2,650.
 
HDFC Securities
 
TVS Motor’s Q3 Ebitda margin of 11.9 per cent exceeded HDFC’s estimate of 11.3 per cent, aided by continued cost reduction initiatives. 
  The Management expects TVS to continue outperforming the industry, driven by strong product offerings, operating leverage, and sustained cost reductions, which will support margin expansion. 
 
Moreover, the company sees major potential in the export segment, particularly in Latin America, Europe, and other global markets. There are also efforts to ramp up sales of e2Ws in international markets. 
 
However, HDFC remains cautious about the investments in subsidiaries, particularly the development of Norton bikes and e-bikes, citing potential design and cost challenges related to Euro 5+ norms. The core business is valued at 29x Dec-26 EPS, with a target price of Rs 2,620 and a ‘Add’ rating.
 
Anand Rathi
 
Anand Rathi’s outlook on TVS Motor remains positive. The firm expects strong volume and revenue growth driven by cyclical upturns in domestic and export markets, as well as TVS's aggressive EV strategy. 
 
Anand Rathi anticipates margin expansion due to economies of scale and cost-cutting measures. They forecast volume/revenue/Ebitda/core PAT growth of 12 per cent/15 per cent/17 per cent/17 per cent over FY25-27, driven by recovery in domestic/export markets and new product launches, including CNG 2Ws, EVs, and the Triumph range. 
 
Thus, analysts maintained their ‘Buy’ rating, with a reduced sum-of-parts target price of Rs 10,000 (earlier Rs 14,000).
 
Global brokerages 
According to reports, Macquarie has maintained an ‘Outperform’ rating with a target of Rs 2,857. JPMorgan has maintained ‘Overweight’ rating with a target of Rs 3,130. Meanwhile, CLSA has maintained a ‘Hold’ rating and cut the target to Rs 2,511 from Rs 2,730.

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First Published: Jan 29 2025 | 11:21 AM IST

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