Sustaining growth outperformance key for more gains in TVS Motor

TVS Motor posts record quarterly sales and strong earnings, driven by premium products and EV growth; brokerages stay bullish on sustained momentum and market share gains

Two-wheeler major TVS Motor Company (TVS) posted a healthy September quarter performance on the back of its highest quarterly sales volumes. Growth was strong across segments, including electric vehicles, despite supply chain disruptions. The stock has been a major outperformer over the last year, notching up gains of 42.9 per cent, and could maintain its momentum given the bullish views of brokerages.

 

TVS posted revenue growth of 29 per cent year-on-year (Y-o-Y), led by volume growth of 23 per cent, while the rest of the gains were on account of higher realisations. This was driven by a richer product mix due to a higher share of premium vehicles and exports. The company posted its highest-ever quarterly sales at 1.5 million units, which was up 22.7 per cent Y-o-Y.

 

Motorcycle volumes were higher by 20 per cent Y-o-Y, and scooters were up 30.4 per cent, while three-wheelers gained over 41 per cent. Though there was a rare earth magnet supply issue, the EV business reached its best-ever quarter with 80,000 units sold, gaining 7 per cent over the year-ago quarter.

 

Analysts led by Jay Kale of Elara Securities believe that the company is a perfect play on the consistent rise in blended domestic two-wheeler (2W) market share, with Vahan retail market share up 180 basis points Y-o-Y to 19.6 per cent in Q2FY26. Other positive factors include growth in the two-wheeler industry outperforming other auto segments, strong export growth, and potential for structural growth in margins. It has an “accumulate” rating on the stock.

 

The company’s operating profit margin improved 100 basis points to 12.7 per cent (11.7 per cent in Q2 last year), driven by volume leverage, richer product mix, and strategic cost optimisation. Adjusted for the production-linked incentive (PLI), the improvement was 50 basis points Y-o-Y as compared to 12.2 per cent in Q2FY25.

 

The company expects to do better than peers in the second half of FY26 on the back of its premium product portfolio, EV sales, and new product launches. Growth in the premium portfolio is expected to come from the Raider, Apache, Ronin, and Jupiter 125/110 versions. Axis Securities has a “buy” rating on the stock and anticipates total sales volumes to grow at an 11 per cent annual rate over FY25–28.

 

While Antique Stock Broking is positive on the outlook, it has a “hold” rating given the lack of upsides from current levels. The premium valuation multiple is justified by the company’s superior execution and growth trajectory but limits near-term upside potential, says Shridhar Kallani of the brokerage. He advocates a “buy on dips” strategy, as any market-led correction would present an attractive entry point into this high-quality, well-managed automotive play.

 

Motilal Oswal Research has upgraded the stock to a “buy” from a “neutral” rating earlier. It has raised its FY27 estimates by 5.5 per cent given TVS’s healthy launch pipeline. Aniket Mhatre of the brokerage believes that its consistent market share gains across key domestic and export segments, along with a gradual improvement in margins, have driven healthy returns over the years. This strong track record is likely to help sustain its premium valuations in the long run, says the brokerage.