Despite a quarterly earnings shortfall, TVS Motor shares increased 9% to ₹2,539 due to favorable analyst ratings. While Motilal Oswal pointed out possible motorbike problems, brokers Macquarie and JP Morgan maintained positive outlooks, predicting market share and margin increases.
On Wednesday, January 29, shares of TVS Motor Company, one of the nation’s top producers of two- and three-wheelers, surged for the second straight trading day, rising an additional 9% to a three-week high of ₹2,539 each. After the company’s December quarter performance was released, brokerages maintained their optimistic outlook, which caused the stock to rise.
As its two-wheeler sales climbed at the weakest rate in over a year, the business posted a third-quarter profit during market hours on Tuesday that fell short of expectations. Nonetheless, the stock ended the day 5% higher due to improvements in operating figures.
Brokerages Retain Bullish Stance:
With a target price of ₹2,857 per share, international brokerage firm Macquarie maintained its ‘Outperform’ rating on the stock following the company’s Q3 results. According to the brokerage, better gross margins drove a small EBITDA beat in the third quarter of FY25. Macquarie says market share and margin expansion gains will propel industry-leading profit growth and stock performance.
With a target price of ₹3,130 per share, Morgan maintained its ‘Overweight’ rating on the company. Nuvama Institutional Equities, a domestic brokerage company, maintained its ‘purchase’ recommendation on the stock, maintaining its target price of ₹3,100 per share.
“TVS Motor has been increasing its domestic and international market share, and by FY27E, we anticipate that its domestic share will have increased from 17% in FY24 to 18%. Additionally, we anticipate margin growth in the upcoming quarters due to PLI incentive accounting,” the brokerage stated.
As a result of several releases (Jupiter, Zest, Ntorq, iQube, and Raider), its domestic 2W market share increased from 15% in FY19 to 17% in FY24. Based on TVSL’s robust presence in ICE executive/premium bikes and EVs, the brokerage projects FY27E’s share to be 18%.
With a target price of ₹2,570 per share, Motilal Oswal, on the other hand, kept its “Neutral” rating on the company. Customers have responded well to the recently released Jupiter 110, according to the brokerage, and it is anticipated that TVS Motor will increase its share in the scooter segment in the upcoming quarters.
However, it pointed out that in the motorcycle category, the business has lagged the market in FY25 YTD, especially in the 125cc class, a significant growth driver in recent years. Furthermore, the brokerage noted that although the export market is recovering, its full recovery has not yet been achieved.
The company’s standalone net profit for the December quarter increased by 4.2% year over year (YoY) to ₹618 crore from ₹593 crore at the same time the previous year. Operating revenue for the third quarter of FY25 was ₹9,097 crore, a 10% increase over the ₹8,245 crore earned in the same quarter of the previous fiscal year.
In the third quarter of FY25, the company’s operational EBITDA increased by 17% to ₹1,081 crore, up from ₹924 crore in the same period last year. With an operating EBITDA margin of 11.9% for the quarter, it was the best since Q3 of FY24, when it was 11.2%.
Compared to the 11.0 lakh units sold in the quarter ending in December 2023, the company’s 12.1 lakh units during the quarter ending in December 2024 represented a 10% rise.
