Leading two and three-wheeler maker TVS Motor Company has indicated a total spend of about ₹1,150 crore this fiscal, which will include capex and investments in subsidiaries, while announcing its highest-ever quarterly revenue, EBITDA and profit after tax recorded for the April-June 2022 period.

The company has proposed a capex of ₹750 crore this fiscal, which it will use to continue investing in new products, technology and capacity ramp-up. The company is planning a series of new products, including electric two and three-wheelers in the coming months. “Next 24 months will be an important phase for us as we will roll out a new set of products across customer segments,” KN Radhakrishnan, Director & CEO of TVS Motor Company, said during the company’s Q1 FY23 conference call.

The company is likely to invest ₹300-400 crore in its subsidiaries such as TVS Credit Services and Norton, a UK-based premium bike brand. It will invest in TVS Credit to maintain the capital adequacy norm, while there will be some investments in Norton for its capex programmes.

Improving sales

While TVS Motor expects the recently launched 225cc motorcycle Ronin to create its own segment in the high-end bike market, it is seeing improving sales for scooters such as Jupiter and NTorq. Radhakrishnan also said its electric scooter iQube has been reporting a month-on-month increase in volumes. In Q1, the company sold about 9,000 units of iQube. While it sold about 4,500 units in June alone, the company hopes to reach monthly volumes of 10,000 units gradually in the coming months. Its current order book for iQube is about 20,000 units.

The company expects its exports to stay strong but sees some temporary disruptions in terms of high inflation and depreciation of the currency in some markets. “We are cautiously optimistic. These are short-term issues, but we are confident of growing better than the industry in those markets due to growing requirements for mobility,” he added.

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Stellar Q1

Meanwhile, the company has ended Q1 by registering the highest-ever revenue, EBITDA and profit after tax. It recorded an operating revenue of ₹6,009 crore (₹3,934 crore in the year-ago period). EBITDA stood at ₹599 crore (₹274 crore), while PAT was at ₹321 crore (₹53 crore). The numbers are not strictly comparable with the year-ago quarter due to lockdowns then.

Amid commodity price increases, a combination of factors such as growth in sales — both in domestic and export markets — price increases and cost control measures have helped the company achieve an EBITDA margin of 10 per cent. Radhakrishnan said the expected normal monsoon would help improve the rural economy and thereby drive two-wheeler volumes. Also, the upcoming festival season will drive volumes for two-wheelers, he added.

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