TVSMOTOR - TVS Motor Company Ltd. Share Price

TVS Motor Company's management expressed a highly optimistic outlook for FY'26, expecting steady growth momentum in the domestic market, similar to FY'25, driven by improved consumer sentiment and infrastructure development. The GDP is projected to grow around 6.5%, and key factors like lower EMI due to a 50 basis point repo rate cut and higher income tax rebates from Rs.7,00,000 to Rs.12,00,000 are expected to enhance affordability for two-wheelers.

Key numbers from the management's remarks include a record high sales figure of 4.7 million units and revenue of Rs.36,251 crores for FY'25, resulting in a profit before tax (PBT) of Rs.3,629 crores. Operating EBITDA hit Rs.4,454 crores, with an EBITDA margin of 12.3%, and a solid performance in both domestic and international markets, with domestic ICE two-wheeler sales up by 9% and international growth at 23%. Electric two-wheeler sales surged by 44% to 2.8 lakh units.

Management anticipates a positive sentiment in Q1, driven by a strong marriage season and normal monsoons. They expect the two-wheeler industry growth to be moderate initially but improve later in the year. On the EV front, the industry saw 1.2 million units sold, with TVS aiming to expand its iQUBE brand's market presence, having recently introduced new variants.

Looking ahead, the company committed to leveraging its strong brand portfolio to sustain higher growth than the industry for both ICE and EV segments. The focus remains on ongoing investments in R&D and product development, which include upcoming EV models and new three-wheeler products to capture the growing demand in urban mobility.

Question: Vinay from Morgan Stanley asked, "What exactly is the PLI benefit that we have in the fourth-quarter margin? How much is that?"

Answer: The PLI benefit included in the fourth-quarter margin is 0.5%. This means that even when we adjust for this benefit, we have observed some margin improvement.

Question: Chandramouli M from Goldman Sachs inquired about the percentage of the EV scooter portfolio accruing incentives under the PLI scheme and if it covers the entire portfolio.

Answer: We focus on the total benefits from the PLI scheme rather than individual segments. The incentives are not strictly tied to specific products but encompass our overall performance. The important thing is that the PLI scheme offers exceptional incentives for our total turnover.

Question: Chandramouli M asked about the expected cadence of product launches in the next 12 to 18 months.

Answer: We anticipate launching products regularly, aiming for at least one product launch per quarter. However, the timing is crucial to maximize market response. Our strategy is to invest in product development while ensuring each product gets adequate market attention.

Question: Pramod Kumar from UBS requested clarification on the recurring revenue run rate for 4Q, excluding PLI incentives.

Answer: The revenue for this quarter, including PLI, is approximately Rs.9,342 crores. Without the PLI benefit, you can expect a recurring revenue run rate at around 12% margin.

Question: Kumar Rakesh from BNP Paribas asked about TVS Credit's credit quality metrics like NNPA, GNPA, and credit costs.

Answer: Our GNPA stands at about 2.8% for the March quarter, showcasing the improved quality of our loan portfolio. We have maintained high collection rates, with healthy collections close to Rs.7,000 crores in Q4, demonstrating our focus on quality and profitable growth.