TVS Motor Company Ltd. has bagged a price target hike from Jefferies on the back of improving margins, healthy export game, and a strong demand for two-wheelers in both India and International markets.
Jefferies has raised its target price for the stock to Rs 5,425 from Rs 4,900, and maintained a 'buy' rating, stating that it is delivering well on delivering well on exports, EVs, and margin.
The margin gap between TVS and peers like Hero MotoCorp and Bajaj Auto is also finally narrowing after a long streak of subdued operational profitability.
However, Jefferies highlighted that overseas investments in Norton and e-bikes have yet to deliver results and bulk of the subsidiary losses are sitting on these investments only.
"Subsidiary investments rose at 29% CAGR over last 5Y; subsidiaries made losses on combined basis, although mostly limited to Norton and TVS EBike," Jefferies said in its note.
Additionally, the brokerage also noted the auto company's positive free cash flows, despite high investments.
"TVS's average standalone FCF (after interest expense) has improved from just Rs 0.7bn over FY11-23 to Rs7.3bn over FY24-26 (FY26: Rs9.5bn) despite high capex & investments," Jefferies outlined. Cash Flow growth was aided by a rising top line, improving margins, and negative working capital.
TVS Q1 FY27
TVS Motor reported a strong performance for the June quarter, with net profit rising 51.3% year-on-year to Rs 1,174 crore from Rs 776 crore, aided by robust sales growth across domestic and international markets.
Revenue from operations increased 37.8% to Rs 13,896 crore from Rs 10,081 crore a year ago. EBITDA grew 41.2% to Rs 1,780 crore from Rs 1,260 crore, while EBITDA margin improved to 12.8% from 12.5% in the corresponding quarter last year.
TVS Share Price History
The shares have risen 17.12% year-to-date and 34% in the last 12 months. On Tuesday, the stock ended 0.66% lower at Rs 4,356.80.
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