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TVS Motor hits a speed bump despite strong Q4 show

29-Apr-25 13:24 Hrs IST

In the fourth quarter, TVS Motor made significant strides in enhancing margins and profitability, prompting several brokerages to raise their target prices on the stock. However, some concerns linger, particularly around the demand outlook and the increasing competition in the electric two-wheeler space.

According to a domestic brokerage, the company's EBITDA fell slightly short of expectations due to lower-than-anticipated benefits from the Production Linked Incentive (PLI) scheme. Nonetheless, the firm noted that TVS remains well-positioned to benefit from PLI going forward and is likely to see market share gains in both domestic and international markets.

The brokerage expects margin expansion driven by improved product mix, better scale, higher PLI incentives, and ongoing cost-efficiency measures. It has maintained a buy rating on the stock while raising its target price to Rs 3,200 from Rs 3,100 earlier.

Another domestic broker believes the company's outperformance to positive sentiment, citing volume growth supported by the company's focus on premiumisation and new electric vehicle launches. It maintained a buy rating and increased the target price to Rs 3,150. However, the firm also flagged potential risks, including a possible industry slowdown that could weigh on future performance.

In contrast, another brokerage took a more cautious stance, noting that TVS Motor underperformed the broader industry in the motorcycle segment during FY2025. It highlighted ongoing demand weakness in domestic markets post-festive season and uncertainties surrounding export demand. The brokerage reiterated a neutral rating with a target price of Rs 2,720.

Overall, while TVS Motor's robust Q4 performance has been acknowledged, divergent views among brokerages reflect the challenges the company may face in sustaining momentum amid a dynamic competitive and economic environment.

On the earnings front for Q4, TVS Motor reported 75.53% surge in standalone net profit to Rs 852.12 crore on 16.91% increase in revenue from operations to Rs 9,550.44 crore in Q4 FY25 over Q4 FY24.

Profit before tax stood at Rs 1,111.98 crore in the fourth quarter of FY25, up 65.56% from Rs 671.63 crore posted in the same quarter last year.

The company posted its highest-ever operating EBITDA of Rs 1,333 crore for Q4 FY25, compared to Rs 926 crore in Q4 FY24, marking a 43.95% increase. The operating EBITDA margin stood at 14% in Q4 FY25.

The overall two-wheeler and three-wheeler sales, including exports, grew by 14% YoY registering 12.16 lakh units in the quarter ended March 2025.

Motorcycle sales for the quarter ended March 2025 grew by 10% YoY registering 5.64 lakh units, while scooter sales grew by 27% YoY registering 5.02 lakh units during the fourth quarter of FY25.

Three-wheeler sales for the quarter under review grew by 21% registering 0.37 lakh units as against 0.30 lakh units in the fourth quarter of 2023-24.

Electric vehicle sales grew by 54%, registering of 0.76 lakh units in the quarter ended March 2025, compared to 0.49 lakh units sold in the same quarter of the previous year.

On a full-year basis, the company's standalone net profit jumped 30.12% to Rs 2,710.54 crore on a 14.08% increase in revenue to Rs 36,251.32 crore in FY25 over FY24.

TVS Motor Company is a reputed two and three-wheeler manufacturer globally. It has four manufacturing facilities in Hosur, Mysuru and Nalagarh in India and Karawang in Indonesia. TVS Motor's group company Norton Motorcycles, based in the United Kingdom, is one of the most emotive motorcycle brands in the world. Its subsidiaries in the personal e-mobility space, Swiss E-Mobility Group (SEMG) and EGO Movement, have a leading position in the e-bike market in Switzerland.