FY23 Scorecard: TVS Motor fares better than Bajaj Auto, Hero MotoCorp on profits and margins

• Among the three players, Bajaj Auto has reported poor performance in the March quarter although it managed to grow on a yearly basis.
• TVS Motor and Hero MotoCorp delivered strong profit and sales growth in FY23 as well as in the recent March quarter.
• All the automakers have delivered growth in profitability and sales.
• This is reflected in the overall growth of the domestic two wheeler industry in FY23, which rose 17% on year after three years of decline.

The most popular brands in the Indian two wheeler industry -- Bajaj Auto, Hero MotoCorp and TVS Motor have come out with their performance for the financial year 2023 and all of them have beat analysts estimates.

All the automakers have delivered growth in profitability and sales. This is reflected in the overall growth of the domestic two wheeler industry in FY23, which rose 17% on year after three years of decline. The industry clocked sales of 15.86 million units in FY23 from 13.57 million in the last fiscal year, according to Society of Indian Automobile Manufacturers (SIAM)

However, reports say that the segment is still at a nine year low.

Among the three players, Bajaj Auto has reported poor performance in the March quarter although it managed to grow on a yearly basis.

Bajaj Auto’s Q4 standalone net profit fell 2% on year to ₹1,433 crore. Rising input costs and shrinking exports ate into the two-wheeler maker's volumes as well as bottomline, even as the company’s topline expanded by 12% to ₹8,905 crore during the quarter.

In fact, analysts believe it may continue to underperform its peers because of weak presence in the domestic market.

“Even so, we believe the company would underperform peers such as Eicher Motors (12% growth in FY24E) and TVS Motors (10% growth). Bajaj Auto’s underperformance is likely to persist owing to its weak presence in scooters in the domestic market, not to mention its large exposure to overseas markets,” said a report by Nuvama Institutional Equities.

Stress of rising input costs in FY23 was clearly visible – Bajaj Auto’s input costs rose by nearly 9% to ₹24,073 crore, eating into its profits.

Comparison of the three two wheeler maker’s financial performance

Meanwhile, TVS Motor and Hero MotoCorp delivered strong profit and sales growth in FY23 as well as in the recent March quarter.

Hero MotoCorp beat analyst estimates to deliver a 37% YoY rise in standalone net profit to ₹859 crore in Q4, aided by price hikes, cost cutting and improved product mix.

Further, the company said that in the coming fiscal year, it has lined up a slew of product launches in different segments with an aim to strengthen its premium portfolio as well as premiumisation of existing models, which will help deliver improvement in market share.

On the other hand, TVS Motor outperformed the other two and registered 67% on year growth in net profit along with sharp 140 basis points expansion in operating margin as well.

After posting strong March-quarter earnings, the shares of the motorcycle manufacturer hit a 52-week high at ₹1,235, up nearly 6% on Friday.

The management said that it expects to outperform the industry in both domestic and export segments due to demand recovery led by the premium and electric vehicle (EV) segment.

“With supply challenges now largely over, we expect TVS’ outperformance to continue on the back of the ramp-up of its launches. Even in EVs, it seems to be ahead of its listed peers with a strong product pipeline in place for the next 24 months; it has signed up with industry experts and joint venture partners to emerge as a leading player in EVs,” said a report by HDFC Securities.


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