TVSMOTOR - TVS Motor Company Ltd. Share Price

TVS Motor Company reported a notable performance in the first quarter of FY '26, achieving record revenue of INR 10,081 crores, which reflects a 20% year-on-year growth from INR 8,376 crores. The company's two-wheeler domestic ICE sales grew by 8%, whereas international sales surged by 40%, outpacing industry growth of 23%. Electric two-wheeler sales also increased by 35%, totaling 70,000 units, while three-wheeler sales saw a robust 46% growth to 45,000 units.

Management expressed optimism for the upcoming quarters, highlighting a moderately positive outlook for rural markets following early monsoon arrivals. They anticipate growth driven by improved retail financing due to a 100 basis points reduction in the benchmark repo rate over the past six months. The company expects growth to enhance further during the festive season in Q2.

TVS aims to outpace industry growth through strong customer focus and innovative product offerings. The company's EBITDA for this quarter reached INR 1,263 crores, marking a 32% increase, with margins improving to 12.5%. Profit before tax also grew by 35% to INR 1,053 crores.

Looking ahead, management is keen on expanding the Norton brand in Europe and India, with multiple product launches planned in Q3 and Q4. They emphasized their commitment to tackling supply chain challenges for rare earth magnets by exploring alternative solutions. Additionally, the company aims for growth in international markets, particularly in Africa and LATAM, where they see potential for increased market share.

Overall, TVS maintains a focus on leveraging its established brands and product mix to sustain growth momentum, aiming to enhance margins while expanding market share.

Here are the major questions and responses from the Q&A section of the earnings transcript:

1. Question: "If I look at quarter 1, we are saying that rural is doing better, but at the same time, we've seen mopeds are down Y-o-Y. Does it mean that scooterization is rising in rural, and that explains this commentary?"

   Answer: In the ICE segment, rural growth was only 3.3%, indicating a slight underperformance. However, positive trends like early monsoon and better reservoir levels suggest improved agricultural growth ahead, which should aid rural demand.

2. Question: "How is scooterization in the rural area?"

   Answer: Scooterization is improving in rural areas due to better infrastructure and road conditions. This trend is contributing positively to the rising proportion of scooters sold in those regions.

3. Question: "On electric vehicles, is our motorcycle launch on track given the magnet restrictions? Any comments on full-year electric two-wheeler sales?"

   Answer: The motorcycle launch timeline will be clearer closer to the launch, as we are exploring alternatives for magnet issues. Sales for electric two-wheelers are expected to maintain growth despite current challenges.

4. Question: "What's the market share aspiration in the next two years, given our current growth and EBITDA margins?"

   Answer: Our focus remains on delighting customers with exceptional products. We believe we can continue to grow ahead of the industry, supported by a strong product mix and strategic investments in customer-driven solutions.

5. Question: "Can you shed light on the progress with Norton and expected investments going forward?"

   Answer: Norton products are set to launch in Q3 and Q4. The investment will continue to support product development and marketing initiatives, ensuring we have a robust launch plan in place for key markets, including India.

6. Question: "Are we seeing headwinds in the commodity basket that could affect financials?"

   Answer: Some commodity costs, like steel, may see a 0.5% increase, but we can mitigate this through price adjustments and cost reduction strategies. While challenges exist, they are manageable.

7. Question: "What's the current status of the e-three-wheeler segment in terms of PLI and profitability?"

   Answer: We will start receiving PLI for three-wheeler EVs from June. We are positive on gross margins, ensuring we scale up successfully as customer demand grows.

8. Question: "How are we positioned in the electric three-wheeler market in India?"

   Answer: We currently cover 70% of the three-wheeler market with our network and are expanding it. Capacity to meet growing demand is not an issue; supply chains remain agile.

9. Question: "What are the prospects for TVS Credit Services going public?"

   Answer: There hasn't been any formal discussion about an IPO, but we acknowledge the strong performance and operational efficiency of TVS Credit, which continues to grow positively.

10. Question: "Can you share EV revenue for the quarter and details on staff costs?"

    Answer: EV revenue reached approximately INR1,000 crores. Staff costs rose due to annual increments and performance appraisals, but we are strategically hiring for growth areas.

This summary encapsulates the key inquiries and management's responses, maintaining essential details and figures while giving an overview of the company's outlook and strategic directions.