Strong Q2, EV gains power bullish view on TVS Motor Company; targets raised

The Street expects TVS Motor's consistent outperformance, new launches, and EV traction to sustain earnings momentum, even as some brokerage houses flag valuation concerns.

Two- and three-wheeler maker TVS Motor Company’s strong September quarter (Q2FY26) performance and improving outlook across domestic, export, and electric vehicle (EV) segments have led most brokerages to stay positive on the stock, with a few raising their target prices. 

 

The Street expects the company’s consistent outperformance, new launches, and EV traction to sustain earnings momentum, even as some brokerage houses flag valuation concerns.

 

Japanese brokerage firm Nomura said it expects ‘outperformance across all segments,’ emphasising that the company’s EV three-wheeler ramp-up and Norton luxury bike launch offer potential upside. It maintained a ‘Buy’ rating and lifted its target price to ₹3,970, implying a 12 per cent upside.

 

The brokerage noted that TVS Motor’s Q2FY26 revenue rose 29 per cent year-on-year (Y-o-Y), with an Ebitda margin of 12.7 per cent (Nomura estimate: 13.5 per cent, consensus: 12.8 per cent). “PLI was ~0.6 per cent of revenue in Q2,” it added, while consolidated PAT stood at ₹800 crore, about ₹110 crore lower than standalone profits as subsidiary losses narrowed.

 

Nomura pointed out that the company invested ₹550 crore in subsidiaries during the quarter and expects domestic two-wheeler volume growth of around 8 per cent for the industry in H2, with TVS likely to outperform. It added that festive growth in Vahan registrations was 24 per cent for the industry and 32 per cent for TVS.

 

The brokerage said, “We expect TVS to outperform the 2W industry, led by the success of recent launches, rising scooter share and healthy traction in export markets.” It, however, trimmed FY26-28F Ebitda margins by 40-50 basis points (bps) due to lower PLI accruals and cut EPS estimates by 5-6 per cent. Nomura values the stock at 33x FY28F earnings per share (EPS), discounted to December 2027, and sees “strong 25 per cent EPS CAGR over FY26-28F and 15 per cent potential EPS growth in the medium term.”

 

Motilal Oswal Financial Services upgraded the stock to ‘Buy,’ from ‘Neutral,’ with a target price of ₹4,159. The brokerage said, “Continued outperformance to support premium valuation.” It noted that Q2 PAT at ₹910 crore was below its estimate of ₹990 crore, as higher depreciation and losses on fair valuation of TVS Supply Chain impacted results. However, Motilal Oswal remains upbeat on growth prospects, on the back of the company’s robust product pipeline and sustained market share gains.

 

“Backed by GST rate cuts, management expects 2W demand momentum to sustain in H2 and TVS to continue outperforming going forward,” it said. Motilal Oswal projects TVS Motor to deliver revenue/Ebitda/PAT CAGR of 21 per cent/25 per cent/29 per cent over FY25-28E, and believes the automaker’s consistent market share gains and gradual margin improvement will “help sustain its premium valuations in the long run.”

 

Emkay also maintained its ‘Buy’ rating, with a sum-of-the-parts-based target price of ₹4,200. It said TVS Motor ‘logged a healthy Q2, with 29 per cent Y-o-Y revenue growth and 12.7 per cent EbitdaM,’ adding that the company outpaced peers with ~32 per cent festive growth, compared to the industry’s 24 per cent.

 

Analysts at Emkay noted that the company is ‘a key beneficiary of India’s EV transition, backed by its strong e-2W portfolio (iQube) and recent launches (e.g. Orbitor, Cargo E-3W).’ It expects TVS to deliver 20 per cent/25 per cent/28 per cent CAGR in revenue/Ebitda/core EPS over FY25–28E, citing structural growth drivers from EV penetration and export recovery.

 

Those at Nuvama Institutional Equities also stayed positive with a ‘Buy’ call and a target price of ₹4,100, saying “Revenue/Ebitda soared 29 per cent/40 per cent Y-o-Y to ₹11,910 crore/1,510 crore, broadly in line with our estimates.” The brokerage slightly trimmed its FY26E/27E EPS estimates by 3-4 per cent but remains confident of sustained double-digit growth across both domestic and export markets.

 

It added, “TVSL has been gaining share across markets and we reckon its domestic share shall rise from 18 per cent in FY25 to 19 per cent by FY28E.” Nuvama expects margin expansion ahead due to better scale/mix, higher PLI benefits and cost savings, projecting revenue and earnings CAGR of 15 per cent and 27 per cent, respectively, over FY25–28E.

 

Choice Institutional Equities, however, retained a ‘Reduce’ rating with a target price of 

₹3,400, amid expensive valuations despite operational strength. The brokerage noted, “In Q2FY26, TVS Motor registered total volume growth of 23 per cent Y-o-Y against the industry's 11 per cent Y-o-Y, driven by robust demand across segments.”

 

It highlighted strong domestic ICE growth (21 per cent Y-o-Y), international volume surge (31 per cent Y-o-Y), and EV sales up 7 per cent Y-o-Y, with iQube crossing 700,000 units. Choice said, “This diversified outperformance across domestic, international; ICE and EV segments underscores the company’s superior execution and competitive strength.”

While it revised EPS estimates marginally lower, it maintained its cautious stance on valuation, noting it remains “positive on the long-term growth prospects of TVSL.”

 

The Street remains bullish on TVS Motor, with brokerages reiterating or upgrading Buy calls, and targets clustering between ₹3,970 and ₹4,200. That said, most brokerages expect sustained outperformance led by new launches, expanding EV portfolio, and export momentum.