Prabhudas Lilladher's research report on TVS Motor Company
TVS Motor Company’s (TVSL) 1QFY24 realization was flat QoQ, as lower EV volumes at c39k units (-10% QoQ) along with poor mix had an impact. The company plans to reach 25k unit monthly EV volumes by August month (18k units in May). EBITDA margins, on the other hand, benefited from operating leverage QoQ, price hikes, lower EV mix and inventorisation and expanded c30bp QoQ to 10.6%. We expect margins to further benefit from low raw material prices in the subsequent quarter, while exports volume should see sequential improvements. TVS is well placed to outperform the industry given (1) new product launches in ICE & EV segments (2) higher focus on exports & premiumisation and (3) margin improvement helped by cost control, (4) operating leverage, (5) benign input prices and (6) price hikes which could more than offset negative impact from higher EV mix.
Outlook
We change our EPS estimates by c2% for FY24/FY25 each considering largely in-line revenue in 1Q and also incorporate the commentary on margins. Maintain ‘ACCUMULATE’ with TP of Rs1,400 (earlier TP at Rs. 1,380) at 27x Mar-25E EPS incl. Rs34 for TVS credit.
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