Prabhudas Lilladher's research report on TVS Motors
TVS reported record revenue/EBITDA/PAT at Rs 60/5.9/3.2bn with a growth of 8.7/7.7/16.8% QOQ. It reported double-digit EBITDA margin at 10% (PLe: 9.7%; flat QoQ) despite commodity cost pressures - supported by higher ASPs (+3.3% QoQ), steady exports (37% of total volumes, similar QoQ) and premiumisation. Domestic demand outlook remains healthy on the back of normal monsoons and higher rural incomes. Positive growth to continue in export markets despite fears around currency devaluation and inflation supported by strong product offerings and new launches. iQube production is inching towards 10k units/month - 8.7k units of iQube were sold in 1Q vs 10.7k in FY22; current order book of ~20k units. Management highlighted strong product pipeline over FY23 for ICE and EV models. We believe TVS will be able to sustain growth momentum and grow ahead of the industry, driven by (1) new product launches in ICE & EV segments along with its revamped product portfolio (2) strong exports and premiumisation and (3) margin protection through cost reduction efforts and price hikes.
We marginally increase our EPS estimates by 2% each for FY23/24 to factor healthy 1Q performance. Maintain ‘BUY’ with revised target price of Rs 950 at 24x on FY24E EPS and Rs 34 for TVS Credit.
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