Target: ₹2,839
CMP: ₹2,482.40
Broadly, TVS Motor has reported bottom-line in line with estimates in Q2FY25 led by of sustenance of EBITDA margin at above 11 per cent level. Revenues increased by 13.3 per cent y-o-y to ₹9,228 crore (Vs estimate of ₹9,538 crore) on the back of 14.3 per cent y-o-y increase in volumes as ASPs declined by 0.9 per cent y-o-y.
We attribute rise in sales of lower version of I-Qube as a key reason for drop in average selling prices (ASPs) y-o-y. EBITDA increased by 20 per cent y-o-y to ₹1,080 crore (Vs estimate of ₹1,093 crore). EBITDA margin expanded by 70 bps y-o-y to 11.7 per cent (Vs estimate of 11.5 per cent). This was the fifth consecutive quarter when TVSM has reported EBITDA margin above 11 per cent while it has yet to account PLI benefits in its financials.
After the success of its electric scooters (iQube) in the domestic market, TVSM has started exporting it in overseas markets also. It is also expected to launch one more EV during the remainder of FY25. TVSM has been playing multiple products in numerous segment approach to build a sustainable business model, which we believe helps the company to capture growth coming in various subsegments at different point of time.
Key Risks: Geopolitical tensions affect commodity prices and cause supply constraints.