TVS Motor’s Q1 profit up 46% on solid sales and margin growth

Its scooter sales for the quarter ended June 2023 grew by 11 percent at 3.50 lakh units as against 3.15 lakh units in the first quarter of 2022-23

Riding on phenomenal growth in sales, an improved margin, cost-saving measures, and a wider product mix, TVS Motor Company reported a 46 percent rise in net profit to Rs 468 crore for the quarter ended June. The Chennai-based two- and three-wheeler manufacturer recorded a 20 percent jump in revenue to Rs 7,218 crore, compared to Rs 6,009 crore in the same period last year.

TVS Motor also posted its highest-ever operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) of Rs 764 crore, with a growth of 27 percent for the first quarter of the financial year 2023-24 (Q1 FY24) against Rs 599 crore in the corresponding period of FY23. Furthermore, its EBITDA margins improved 60 basis points (bps) to 10.6 percent, compared to 10 percent in the quarter ended June 2022.

TVS Motor posted its highest-ever profit before tax (PBT) of Rs 610 crore, recording a growth of 41 percent in the reporting quarter of FY24 against Rs 432 crore in the first quarter of FY23. PBT for the quarter includes Rs 55.6 crore in profit on the sale of investments.

On a consolidated basis, TVS Motor reported a 42.2 percent rise in net profit in the quarter to Rs 434.3 crore from Rs 305.37 crore in the same period last year. Its revenue from operations rose 23.8 percent to Rs 9,055.5 crore from Rs 7,315.7 crore last year.

Shares of the company dropped 2.69 percent to Rs 1,306.50 on the BSE after the results were announced.

The automaker’s overall two-wheeler and three-wheeler sales, including exports, grew by 5 percent to 9.53 lakh units in the quarter ended June 2023, compared to 9.07 lakh units in the corresponding quarter of the previous year. Motorcycle sales grew by 7 percent registering at 4.63 lakh units in the reporting quarter against 4.34 lakh units in the quarter ended June 2022.

Scooter sales for the quarter ended June 2023 grew by 11 percent to 3.50 lakh units, compared to 3.15 lakh units in the first quarter of 2022-23. Three-wheeler sales for the quarter under review stood at 0.35 lakh units, compared to 0.46 lakh units in the first quarter of 2022-23.

TVS also revealed that sales of its electric scooters for the quarter ended June 2023 came in at 39,000 units, up sharply from 9,000 units in the quarter ended June 2022.

Meets analysts' expectations

The growth in revenue and net profit met auto analysts’ expectations. Nirmal Bang expected TVS Motor to report a 37.6 percent year-on-year (YoY) jump in standalone net profit to Rs 377.6 crore. The brokerage firm expected net sales to increase 18.1 percent Y-o-Y (down 0.2 percent Q-o-Q) to Rs 6,529.4 crore. Further, it projected earnings before interest, tax, depreciation and amortisation (EBITDA) to rise 24.9 percent Y-o-Y (up 5.6 percent Q-o-Q) to Rs 695.7 crore.

"Largely in line numbers, TVSL’s margins were helped by inventorisation to some extent, while other expenses have increased as a percentage of sales QoQ and YoY," stated Himanshu Singh - Research Analyst - Prabhudas Lilladher Pvt Ltd.

TVS Motor, in its annual report for FY23, indicated that it expects the growth momentum to continue in the current fiscal year. The company also foresees the premium bike and scooter segments growing on the back of an increase in overseas shipments and higher penetration of electric two-wheelers this fiscal year..