Target: ₹1,696
CMP: ₹1,590.75
TVS Motor (TVSL)’s Q2-FY24 EBITDAM, at 11 per cent (up 50bps QoQ), was in line with consensus/our estimates. Gross Margin improved 60 bps QoQ despite a 200 bps increase in EV volume mix – benefit of which, we believe, got offset by higher S&M expenses driven by new launches. EBITDA/vehicle increased 5 per cent QoQ to ₹8,400/unit with ASP/unit remaining flat QoQ, which comes on the back of lower Apache mix, in our view. TVSL ramped up iQube’s production to 25k units/ month and plans to launch a series of products in the 5–25kW range by FY25-end.
Also read: Broker’s call: Piramal Pharma (Outperformer)
We revise our FY25E EPS by 10 per cent driven by increase in volume estimate by 4% and EBITDAM by 40bps. Maintain Add with a revised DCF-based target price of ₹1,696 (earlier ₹1,442), implying 25x FY25E core EPS. The increase in TP is led by higher earnings and rollover.
Downside risks: Rising competitive intensity in e2W along with reduction in FAME subsidy could pose a risk to profitability improvement of TVS; continuation of weak demand from target export markets; and higher than expected cash outflow w.r.t. investments and rising losses from subsidiaries.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.