TVS Motor gains 3% in weak market on stable Q3 performance

Shares of TVS Motor Company were up 3.4 per cent at Rs 1,019.80 on the BSE in Wednesday’s intra-day trade in an otherwise weak market after the company reported a stable performance, with the company’s standalone operating EBITDA up 16 per cent at Rs 659 crore for the third quarter (October-December) of financial year 2022-23 (Q3FY23). Operating EBITDA margin for the quarter was at 10.1 per cent as against 10 per cent reported in the third quarter of 2021-22 (Q3FY22).

The stock of two-three wheelers was trading higher for the third straight day, gaining 5 per cent during the period. In comparison, the S&P BSE Sensex was down 0.57 per cent at 60,632 at 09:59 AM.

In Q3FY23, the company’s standalone revenue grew by 15 per cent year-on-year (YoY) at Rs 6,545 crore as against Rs 5,706 crore in Q3FY22. Net profit rose 22 per cent YoY to Rs 352.75 crore from Rs 288.31 crore in a year ago quarter. READ MORE

TVS Motor Company announced strategic engagement with Amazon India to strengthen electric mobility, electric infrastructure and connected services and strengthening its commitment to achieving net-zero carbon.

The management said domestic demand is expected to improve sequentially in 4Q, supported by better rural market sentiment on the back of strong rabi crop sowing and higher MSPs. Improving chip supplies would also support volumes of premium products.

Volume growth is likely to be driven by a recovery in the domestic 2W market, new products (Raider and iQube) and a recovery in exports. TVS is enjoying the benefits of economies of scale and operating leverage, resulting in consistent double-digit EBITDA margin. However, TVS earns around 40 per cent of its overall EBITDA from the domestic scooter business, making it vulnerable to EV disruption, Motilal Oswal Financial Services said in result update. The brokerage firm have ‘neutral’ rating on the stock.

The company witnessed a 63 bps gross margins expansion at around 24.5 per cent, with benefits negated by perils of negative operating leverage. The management informed about launching new products in EV space in coming 12-18 months. It has also set an ambitious target of selling ~50,000 – 60,000 EV’s in Q4FY23 i.e. 2x the volumes clocked in Q3FY23 at ~29,000 units, ICICI Securities said in a note.