GST cuts, premiumisation and scooter launches boost TVS Motor outlook

TVS Motor's stock is expected to gain further with GST rate cuts, premiumisation, new scooter launches, and robust sales momentum in domestic and export markets

Launches, gains from the reduction in the goods and services tax (GST), and growth outperformance are expected to help support the stock prices of two-wheeler (2W) major TVS Motor Company. It has gained over 23 per cent since the start of August, compared to the peer average of 7 per cent over this period. Given the premiumisation trend, the gains could sustain going ahead.

 

The immediate gains for the stock are on account of cuts in GST rates. For 2Ws with engine capacity below 350cc, GST rates have been reduced from 28 per cent to 18 per cent. The price cuts expected from the reduction would be about 8 per cent for vehicles in this category. 

Kotak Securities expects TVS to be among the largest beneficiaries, given a high mix of the scooter segment and trends in the domestic 2W market.

 

The brokerage has increased its 2025-26 through 2027-28 earnings estimates by 10–15 per cent for TVS. Analysts Rishi Vora and Apurva Desai have maintained an ‘add’ rating on TVS due to expectations of its outperformance, given industry trends over the medium term.

 

Brokerages highlight that any regulation related to the implementation of the anti-lock braking system next year could lead to a price hike (2–3 per cent), offsetting some of the gains from the GST cut. The impact of these norms will hit the entry-level segment more than others, given that it tends to be the most price-sensitive.

 

Launches over the past month are another trigger.

 

TVS rolled out two scooters to strengthen its portfolio. While the TVS Orbiter, an electric scooter positioned above the iQube, was launched on August 28, the TVS Ntorq 150 — touted as the country’s first hyper sport scooter — is designed to deliver a high-performance riding experience.

 

The strategy, according to analysts Kapil Singh and Siddhartha Bera of Nomura Research, highlights TVS’ intent to scale the electric 2W (e2W) segment while simultaneously expanding its premium internal combustion engine scooter franchise.

 

The brokerage expects TVS to outperform the 2W industry, led by the success of recent launches, rising scooter share, and healthy traction in export markets. The success of upcoming e2W and three-wheeler (3W) launches, along with premium Norton motorcycles, could result in further upside to Nomura’s estimates.

 

Volumes have remained strong for the company, with August registering record-high monthly sales of 509,000 units. The company recorded 29.5 per cent growth in 2Ws in August, while overall growth, including 3Ws, stood at 30.1 per cent.

 

While domestic despatches increased by 28 per cent, they were outpaced by exports, which grew 28.9 per cent. Inventory buildup ahead of the festival season contributed to record-high monthly volumes of 509,000 units. Given the launches and the price cuts, brokerages expect the company’s volumes to grow 10 per cent in September, with momentum picking up in the second half of the month. TVS is expected to maintain the trend of market-share gains in September.