Stock market today: TVS Motor Company, one of the country’s leading two-wheeler and three-wheeler manufacturers, saw its shares spike for the second consecutive trading session on Wednesday, January 29, gaining another 9% and reaching a 3-week high of ₹2,539 apiece. The stock rose as brokerages retained their positive stance following the release of the company’s December quarter performance.
The company, during market hours on Tuesday, reported a third-quarter profit that missed estimates, as its two-wheeler sales grew at the slowest pace in more than a year. However, improvements in operating numbers prompted the stock to end the session 5% higher.
TVS Motor: Brokerages retain bullish stance
Following the company’s Q3 performance, global brokerage firm Macquarie maintained its ‘Outperform’ rating on the stock with a target price of ₹2,857 apiece. The brokerage noted that 3Q FY25 saw a modest EBITDA beat, driven by better gross margins. Macquarie believes that market-share gains and margin expansion will drive industry-leading earnings growth and stock performance.
JP Morgan retained its ‘Overweight’ rating on the stock with a target price of ₹3,130 apiece. Domestic brokerage firm Nuvama Institutional Equities retained its ‘Buy’ call on the stock with an unchanged target price of ₹3,100 apiece.
“TVS Motor has been gaining market share in both domestic and overseas markets, and we expect its domestic share to rise from 17% in FY24 to 18% by FY27E. Furthermore, we forecast margin expansion in subsequent quarters due to the accounting of PLI incentives,” said the brokerage.
Its domestic 2W market share grew from 15% in FY19 to 17% in FY24, with multiple launches (Jupiter, Zest, Ntorq, iQube and Raider) driving market share gains over the years. The brokerage forecasts FY27E share at 18% on the back of TVSL’s strong presence in ICE executive/premium motorcycles and EVs.
Motilal Oswal, on the other hand, maintained its “Neutral” rating on the stock with a target price of ₹2,570 apiece. The brokerage stated that the recently launched Jupiter 110 has been very well received by customers and is likely to help TVS Motor gain a share in the scooter market in the coming quarters.
However, it noted that the company has underperformed the industry in the motorcycle segment in FY25 YTD, particularly in the 125cc segment, which has been a key growth driver in recent years. Additionally, while there is a recovery in the export market, its full recovery has yet to be realised, the brokerage observed.
TVS Motor Q3 earnings snapshot
The company reported a 4.2% year-on-year (YoY) increase in its standalone net profit for the December quarter, reaching ₹618 crore compared to ₹593 crore in the same period last year. The revenue from operations for Q3FY25 reached ₹9,097 crore, marking a 10% increase from ₹8,245 crore in the same quarter of the previous financial year.
The company’s operating EBITDA grew by 17%, reaching ₹1,081 crore for the third quarter of FY25, compared to an EBITDA of ₹924 crore in Q3 FY24. The operating EBITDA margin for the quarter was the highest at 11.9%, compared to 11.2% in Q3 FY24.
The company recorded sales of 12.1 lakh units, registering growth of 10% for the quarter ended December 2024 as against 11.0 lakh units reported in the quarter ended December 2023.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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