TVS Motor gains 4%, scales new summit on hopes of strong Q2 earnings

Shares of TVS Motor Company hit a new high of Rs 1,187.70, gaining 4 per cent on the BSE in Tuesday’s intra-day trade on expectation of strong earnings growth, led by a recovery in domestic two-wheeler volumes. The stock has surpassed its previous high of Rs 1,106.80, touched on Friday October 14.

Thus far in the month of October, TVS Motor has outperformed the market by surging 8 per cent, after the company said it has had a robust start to the festive season and the demand is expected to further accelerate during the season. In comparison, the S&P BSE Sensex was up 2.8 per cent in past 11 trading sesions of the current month.

In September, TVS Motors’ volumes grew by 9 per cent year-on-year (YoY) to 379,011 units, above analyst estimates, owing to better-than-expected volumes in the domestic market. On the international markets front, the company said there is marginal improvement, however, the challenges with economic slowdown and higher inflation still persists. The management is cautiously optimistic that the sales momentum will continue to improve.

Analysts at Emkay Global Financial Services expect TVS Motor to post double-digit volume growth in FY23E and market-share gains in both, the domestic and overseas markets.

Despite the recent price increases, volume growth expectations remain in double-digits for the upcoming Diwali festival. Enquiries and bookings are increasing for E-2Ws, considering central/state government incentives and favourable cost of ownership. Dealers expect major OEMs to have dominant share in EVs, given quality/safety issues being faced by start-ups, the brokerage firm said in auto sector update.

TVS Motor has lined up a series of launches in 5-25KW categories in the next two years, targeted at segments such as premium scooters, high-performance sporty motorcycles, commuter space, delivery market and 3Ws.

Meanwhile, TVS Motor’s board is scheduled to meet on November 4, to consider and approve unaudited financial results for the quarter ended September 2022 (Q2FY23).

Analysts at Prabhudas Lilladher expect a 15 per cent increase in revenue due to a 13 per cent increase in volumes. TVS has been benefitting from its premium  bike/scooter portfolio. The brokerage firm expect margin expansion of 70bps QoQ led by raw material cost pressure easing out.

In the past six months, the stock price of TVS Motor has appreciated by 72 per cent, as compared to 3 per cent rise in the S&P BSE Sensex. It zoomed 118 per cent from its 52-week low price of Rs 513 on March 7, 2022.