Buy TVS Motor; target of Rs 1342: HDFC Securities

HDFC Securities' research report on TVS Motor

TVS Motors’ Q4 adjusted PAT at INR 3.64bn came ahead of our estimate of INR 3.3bn, led by the better-than-expected margin. TVS was able to improve margin QoQ despite the ramp-up of iQube in the quarter and that is commendable. TVS continued to outperform peers even in FY23: (1) it gained a 100bps market share in motorcycles to touch a record-high level of 8.9%; (2) in scooters, it is the biggest gainer and its market share is up 220bps to 23.6%; (3) even in 2W EVs, TVS has now emerged as the second-largest player and sold 97k units of iQube in FY23. With supply challenges now largely over, we expect TVS’ outperformance to continue on the back of the ramp-up of its launches, including the new Ronin and Raider. 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 JV partners to emerge as a leading player in EVs.

Outlook

We maintain BUY with a revised TP of INR 1,342/sh (earlier INR 1275), as we roll forward to FY25 EPS (target multiple unchanged at 28x).

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