May 5, 2023By: BI India Bureau
After posting strong March-quarter earnings, the shares of the motorcycle manufacturer hit a 52-week high at ₹1,235, up nearly 6 percent on Friday.
TVS Motor’s standalone net profit jumped 49 percent to ₹410 crore for the March quarter, from ₹275 crore last year – on the back of strong sales. Its revenue from operations grew 19 percent on year to ₹6,605 crore.
TVS Motor’s earnings before interest, tax, depreciation and amortisation (EBITDA) margin grew marginally to 10.3 percent in Q4 from 10.1 percent a year earlier.
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.
“Volume growth is likely to be driven by recovery in the domestic 2W market, new products (Raider, 125CC scooters and iQube) as well as a recovery in exports. TVSL is enjoying the benefits of economies of scale and operating leverage, due to which the EBITDA margin is sustaining at double-digit level,” said Motilal Oswal.
“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.
Anand Rathi is positive on the stock due to many factors like — expectations of a cyclical upturn in domestic/export 2Ws, market-share gains - domestic and overseas; relentless EV strategy and margin expansion emanating from rising economies of scale, a better product mix and cost-cutting measures.