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Nirmal Bang Report
TVS Motor Company Ltd. reported revenue of Rs 66 billion in Q4 FY23, which was ahead our estimate of Rs 65 billion by ~1%. Volume declined by 1.3% QoQ due to challenges associated with the export markets.
While the realisation improved by 2% QoQ on the back of mix improvement and price hikes, gross margin improved by 10 basis points QoQ/80 bps YoY to 24.6%. Ebitda margin came in at 10.3%, up 20 bps QoQ/YoY, but 40 bps below our estimate due to better than-expected operating performance.
Overall, on the demand front, the management sounded hopeful of a recovery in the rural markets going ahead amid rising income levels and improving sentiments while the urban and semi urban markets continue to remain strong.
For the export markets, the management indicated that the worst is over and demand is expected to recover from H2 FY24. However, TVS Motors outperformed industry in the challenging export markets in Q4 FY23.
We reiterate our view that TVS Motors is a front runner in the electric vehicle space among the incumbent original equipment manufacturers as it has chalked out aggressive plans for the EV business, including a series of new model launches over the next 12-18 months, monetisation of the EV arm and investments in technology to cover the entire spectrum of EV product portfolio.
In Q4 FY23, TVS Motors sold 33,000 EV units and expects the momentum to accelerate further in the near term.
The management also highlighted that TVS Motors plans to launch an electric three-wheeler in FY24. We expect the company to continue to outperform the two-wheeler industry growth in FY24/FY25.
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