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Axis Securities Report
TVS Motor Company Ltd. reported a good set of numbers. Revenue (inline) grew by 19%/1% YoY/QoQ led by higher average selling price on account of price hikes taken in the quarter. Despite a higher share of electric vehicles and lower exports, Ebitda grew by 22%/3% YoY/QoQ beating ours and the street's estimates by 6% and 4% respectively.
Ebitda margins improved to 10.3% versus consensus of 10% and 10.1% each in Q4 FY22 and Q3 FY23. Ebitda and margins beat our estimates due to lower raw material costs (gross margins up 24.6% versus 24.5% in the previous quarter and 23.8% in last year's quarter) and lower employee costs.
Profit after tax grew by 49%/16% YoY/QoQ, beating ours and consensus estimates by 23%/17% due to higher other income. The other income includes a fair valuation gain of Rs 62 crore on the equity shares held by the Company.
Outlook:
Considering new product launches in both internal combustion engine and EV segments; we expect TVS Motors revenues to grow at ~10% compound annual growth rate over FY23-25E.
With a strong focus on the EV product pipeline ahead of incumbent two-wheeler OEMs, product premiumisation, and strong execution capabilities, we believe TVS Motors is well-placed among listed players to gain market share in the coming years.
FY24/25 shall be critical for the company as it executes its EV strategy for the domestic and exports market. The company is gearing itself with EV product portfolio offerings ranging from 5Kwh to 25Kwh battery capacity.
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