Buy TVS Motor Company; target of Rs 1300: Prabhudas Lilladher

Prabhudas Lilladher's research report on TVS Motor Company

We keep our estimates unchanged as results were largely in line on revenues; and we are already factoring in EBITDA margin expansion of c50bps in FY24. In 4QFY23, realization was slightly higher QoQ, as EV volumes at c43k units (+48% QoQ) offset negative impact from mix. EBITDA margins benefited from commodity deflation and price hikes and expanded c20bp QoQ to 10.3%. In 4Q, TVS sees EV volumes continue to ramp-up, benefits accruing from price hikes with commodity environment remaining stable. We believe TVS will likely be able to grow ahead of the industry led by (1) new product launches in ICE & EV segments (2) higher focus on exports & premiumisation and (3) margin improvement helped by cost reduction efforts, operating leverage and price hikes which could more than offset negative impact from higher EV mix.

Outlook

Maintain ‘BUY’ with an unchanged TP of Rs 1,300 at 26x Mar-25E EPS including Rs 34 for TVS credit.