Hold TVS Motor Company; target of Rs 2484: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on TVS Motor Company with a target price of Rs 2484 in its research report dated August 07, 2024.

Broker Research

August 07, 2024 / 14:58 IST

hold

Prabhudas Lilladher's research report on TVS Motor Company

TVSL’s Q1FY25 standalone revenue grew by 16% YoY, in line with BBGe, but marginally lower (-1.4%) than PLe. The growth in revenue was driven by 14.1% YoY expansion in volume and 1.7% rise in ASP. Despite a rise in some of the key input costs, gross margin expanded by 316bps YoY to 28.6% led by better product mix, marginal price hike and on cost reduction efforts. Consequently, EBITDA grew by 25.7% YoY, while margin expanded by 88bps YoY to 11.5%. Healthy overall performance drove PAT higher by 23.4% YoY. Going ahead, the management has outlined multiple new launches in EV, ICE and Norton Motorcycles portfolio to increase product offerings across categories. Additionally, TVSL continues to focus on increasing its pan-India presence for EV scooters, which shall pave the way for market share gain and improvement in profitability. Furthermore, it will launch new products in Norton Motorcycles by the end CY25 in Indian and international markets. We change our revenue/EBITDA/EPS estimates by 2-6% over the forecast period factoring in the growth outlook of its businesses.

Outlook

We retain our “HOLD” rating and raise our TP from Rs 2,300 to Rs2,484 (including Rs 69 for TVS Credit), valuing it at a P/E of 33x on its FY26E EPS.

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