TVS Motor shares rise 3% as Q2 gets thumbs up from brokerages on positive commentary

TVS Motor shares have rallied 27 percent since the start of the year.

Shares of TVS Motor Co were off to a positive start, rising over 3 percent to Rs 2,649 even as the Chennai-based two-wheeler's second quarter earnings missed Street estimates. This is because brokerages have issued bullish calls on the counter as they forecast robust levers for growth in the coming quarters.

Despite the miss, Q2 has been a quarter of record highs for the company after TVS Motor reported its highest-ever operating revenue of Rs 9,228 crore for the quarter ended September 2024, reflecting a 13 percent growth compared to Rs 8,145 crore in the same quarter of 2023. The company also posted its highest-ever profit after tax (PAT) of Rs 663 crore for the second quarter.

Should you buy, sell or hold the TVS Motor stock? Here's what experts have to say. 

Investec has maintained a buy rating on TVS Motor, raising the target price slightly to Rs 3,050. The firm cited an operational miss driven by revenues but expects festive demand to fuel growth momentum. Additionally, TVS’s electric vehicle (EV) ramp-up is on track, and Investec projects an EPS compound annual growth rate (CAGR) of around 20 percent over FY24-27, supported by various factors.

Also read: TVS Motor confident of leading EV space, plans more launches this year

Nuvama remains bullish on TVS, retaining its 'Buy' rating with a target price of Rs 3,200. The brokerage highlights the company's increasing market share in domestic and overseas markets, projecting domestic market share to rise from 17 percent in FY24 to 18 percent by FY27. Nuvama expects margin expansion in the coming quarters, driven by the accounting of production-linked incentive (PLI) schemes. Strong growth prospects are forecasted, led by the ongoing upcycle in two-wheelers, market share gains, and an aggressive EV strategy.

Jefferies has maintained its buy call on TVS Motor, though it has cut the target price to Rs 3,270 per share. Jefferies believes the company is well-positioned to benefit from a revival in two-wheeler demand in both domestic and export markets. The improving franchise should also drive continued margin expansion. Although FY25-27 earnings per share (EPS) estimates were cut by 3-4 percent, Jefferies still expects EPS to more than double over FY24-27.

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Emkay has assigned an 'Add' rating on account of positive management commentary. Management highlighted strong industry growth of 11 percent during the Navratras (compared to 4 percent for the entire festive season so far) and expected further improvement during the Dhanteras-Diwali period. The company projects industry growth at 7-8 percent year-on-year for Q3, with TVS expected to continue outperforming its peers, driven in part by the strong response to its newly launched Jupiter 110cc.

Nomura has issued a 'Neutral' call on TVS Motor, citing the risk of slowing industry growth as a concern. While the brokerage expects TVS to outperform the industry, elevated discounts could pressure average selling prices (ASPs) and further impact margin estimates. Higher export growth may help offset domestic market weakness. Nomura has lowered its EBITDA margin forecasts by around 50 basis points to 11.8 percent and 12.1 percent for FY25 and FY26, along with a downward revision of EPS estimates by 7-8 percent.

In its post-result earnings call, TVS which is the second-largest electric two-wheeler maker after Ola Electric, is confident of outpacing industry growth in the coming quarters. The company plans to expand its EV portfolio with several new launches this financial year.

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