TVS Motor Company's Q2 PAT at Rs 9.1 billion was below our estimate of Rs 9.9 billion, even as the Ebitda miss was just 2%. PAT miss was largely driven by higher interest and depreciation expenses, along with a loss on the fair valuation of its investment in TVS Supply Chain. Backed by GST rate cuts, management expects two-wheeler demand momentum to sustain in 2H and TVS to continue outperforming going forward.
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Motilal Oswal Report
Given TVS Motor Company Ltd.'s healthy launch pipeline, we have raised our estimates for FY27 by 5.5%. Overall, we factor in TVS Motor to post a revenue/Ebitda/PAT CAGR of 21%/25%/29% over FY25-28E.
Its consistent market share gains across key domestic and export segments, along with a focus on gradual improvement in margins, have driven healthy returns over the years.
This is likely to help sustain its premium valuations in the long run.
Given its consistent outperformance, which is likely to continue going forward, we now upgrade TVS to Buy (from Neutral earlier). We value TVS at 36x Sep'26 EPS (from 35x earlier) to arrive at our target price of Rs 4159 per share.
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