TVS Motor shares in focus after Q2 profit jumps 50%; CLSA, Nomura see up to 15% upside
Brokerages gave positive outlook on TVS Motor, citing strong volume growth, improving operating performance and opportunities across premium motorcycles, electric vehicles and exports.
Shares of TVS Motor Company Limited traded in red on Thursday, October 29, even as the two-wheeler manufacturer reported a strong set of earnings for the second quarter of the financial year, with a 50 percent year-on-year rise in consolidated net profit and 38.6 per cent growth in revenue. TVS Motor shares were trading 0.42 percent lower at Rs 4,222 at around 10.20 am on the NSE, compared with the previous close of Rs 4,239.90.
However, the stock opened 1 percent higher at Rs 4,283 from the previous close. TVS Motor Q2 FY27 results TVS Motor reported consolidated net profit of Rs 1,194.51 crore for the July-September quarter compared with Rs 795.48 crore in the corresponding period last year. Revenue from operations stood at Rs 19,474.44 crore, compared to Rs 14,051.22 crore in Q2 FY26. The increase in revenue was supported by strong double-digit growth in vehicle volumes during the quarter, which reached an all-time high.
TVS Motor’s overall two- and three-wheeler volume grew by 27 per cent to around 19.19 lakh units from 15.07 lakh units a year ago. Motorcycle sales grew by 28 per cent to around 8.58 lakh units during the quarter from 6.73 lakh units in the year-ago period. Scooter sales increased 29 per cent to 8.25 lakh units from 6.39 lakh units. Its international business registered a 25 per cent increase with sales of 5 lakh units against 4 lakh units in the year-ago quarter.
Two-wheeler electric vehicle sales more than doubled to 1.86 lakh units during the period under review from 80,009 units in the same quarter of the preceding fiscal. Total three-wheeler sales jumped 47 per cent to 78,475 units from 53,449 units a year ago. Key product highlights during the quarter include the launch of an all-new range of TVS Apache RTR. TVS Raider was launched in Africa while TVS Orbiter and NTORQ 150 made their debut in Sri Lanka.
Total expenses during the three months rose 38.9 per cent YoY to Rs 17,776.83 crore from Rs 12,801.67 crore, with cost of materials surging 45 per cent to Rs 12,680.80 from Rs 8,705.78 crore in the year-ago period. Brokerage on TVS Motor share price After the strong quarterly results, brokerages gave positive outlook on TVS Motor, citing strong volume growth, improving operating performance and opportunities across premium motorcycles, electric vehicles and exports.
CLSA on TVS Motor share price: Outperform, target price Rs 4,896 Brokerage firm CLSA maintained an ‘Outperform’ rating on TVS Motor with a target price of Rs 4,896, implying an upside of 15 percent from the previous day close. The brokerage highlighted the company's second quarter (Q2 FY27) EBITDA margin of 13 percent, which improved 17 basis points sequentially despite a 1.9 percent quarter-on-quarter increase in commodity costs was aided by strong scale.
According to CLSA, the impact of higher input costs was offset by a 1.6 percent price hike, operating leverage, cost optimisation and favourable foreign exchange movements. The brokerage noted that canagement remained confident of sustaining volume momentum at a high, single-digit growth rate and expects to outperform the industry both domestically and in export markets. It also highlighted that proposed demerger of TVS Motor’s financial services business from its books in FY28, stating that the move could unlock value in the non-banking financial company (NBFC) business and reduce the parent company's annual investment requirements.
Nomura on TVS Motor share price: Buy, target price Rs 4,605 Nomura gave a ‘Buy’ recommendation for TVS Motor with a target price of Rs 4,605, implying an upside of nearly 9 percent from the previous close of Rs Rs 4,239.90. The brokerage cited a strong growth outlook across segments and better-than-expected average selling prices (ASPs) in the second quarter. The brokerage believes the company's success in premium motorcycles, electric vehicles and exports will support sustained growth.
Nomura said the stock's valuation at 26.7x its FY29 estimated earnings per share (EPS), excluding investments, looks attractive given the expected 20 percent compound annual growth rate (CAGR) in EPS between FY27 and FY29. However, it flagged key risks, including the possibility of lower EV margins compared with internal combustion engine (ICE) vehicles after the production-linked incentive (PLI) scheme ends in FY28.
The brokerage also cautioned that large investments and capital expenditure could strain free cash flow if growth fails to meet expectations. Separately, TVS Motor’s board approved plans to demerge its consumer finance and related business undertaking into a separate holding company. TVS Motor shareholders will receive an equal number of shares in the resulting company as in TVS Motor. "We believe this new structure will create additional value for stakeholders while providing these businesses with greater strategic autonomy.
The demerger will allow them to pursue opportunities across consumer finance and related sectors and allocate capital in line with their growth priorities," Chairman Sudarshan Venu said. “It positions them to realise the full potential of their assets and capabilities while enabling TVS Motor Company to remain focused on strengthening its leadership in mobility globally. Importantly, our shareholders will continue to participate in the future growth of both businesses.”
The board has also approved acquiring a controlling interest in STPL Trading and Services Pvt Ltd for Rs 530.08 crore, which is in the process of merging with TVS Credit Services. TVS Motor will get an additional 2.4 per cent holding in TVS Credit Services post the merger.
