TVS Motor Company's Q2 FY27 Ebitda came in 6% ahead of Motilal Oswal's estimate as the impact of a sharp rise in input costs was offset by improved mix, favorable currency benefits, and tight cost control. However, due to a higher interest costs, net profit came in line with estimate at Rs 13.8b (+52% YoY).
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Motilal Oswal Report
Given TVS Motor Company Ltd.'s strong margin performance in Q2 FY27, higher than expected realisations, strong growth outlook in both domestic and exports and unlikely incremental pressures from raw material, Motilal Oswal has increased its earnings estimates 11%/10% for FY27E/FY28E.
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The brokerage expect this outperformance to continue, given TVS Motor's healthy new launch pipeline, which in turn is likely to help sustain its premium valuations.
The brokerage has reiterated its Buy rating and value the stock at 36 times FY28E earnings per share to arrive at target price of Rs 5,200, implying a potential upside of 23% from the reports market price.
ALSO READ | TVS Motor Q2 Review: Record Market Share, 47% EBITDA Growth Spur Target Hikes; Why Citi Still Says 'Sell'
TVS Q2 Results Highlights
- Revenue grew 43.7% YoY to ~Rs 17,100, broadly in line with brokerage's estimate of Rs 16,400 crore.
- Realisations improved 13% YoY to Rs 89,100 per unit.
- Due to commodity cost inflation, gross margins declined 190bp YoY to 37% (70 basis points above our expectations).
- However, the Ebitda margin at 13% surpassed our estimate of 12.8%, led by improved mix, favorable currency benefits, and tight cost-control measures.
- As a result, Ebitda came in above estimate at Rs 2,220 (+47% YoY).
- Despite margin expansion, PAT came in line with our estimate at Rs 1,380 crore (+52% YoY) primarily due to higher tax rates.
- Consolidarte cash flow from operations for H1 FY27 stood at Rs 3,840 crore,with free cash flow coming in positive at RS 2,080 crore.
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