TVS Motor stock hits all-time high, jumps 5% on healthy June qtr earnings

With normal monsoon expected for this fiscal, TVS expects rural recovery to drive sustained momentum for the industry in the coming quarters.

Shares of TVS Motor Company hit an all-time high at Rs 2,620.20, as they rallied 5 per cent on the BSE in Wednesday’s intra-day trade after the company reported a healthy performance for the June 2024 quarter (Q1FY25). The company posted a 14.1 per cent year-on-year (YoY) growth in total sales volume, at 1.09 trillion units.

The stock price of the, two and three-wheeler manufacturer globally, surpassed its previous high of Rs 2,600.55 touched on August 1. In the past one year, the market price of TVS Motor has zoomed 95 per cent, as compared to 20 per cent rise in the BSE Sensex.

In Q1FY25, TVS Motor’s operating earnings before interest, taxes, depreciation, and amortization (EBITDA) margin significantly improved by 90 bps at 11.5 per cent as against 10.6 per cent in the quarter ended June 2023 (Q1FY24).

The company’s profit after tax (PAT) grew by 23 per cent at Rs 577 crore as against Rs 468 crore during the first quarter of 2023-24. Revenue from operations rose 16 per cent to Rs 8,376 crore as against Rs 7,218 crore in Q1FY24.

The margin improvement was due to material cost savings and a better mix. While the domestic demand outlook is healthy with rural demand coming back, geopolitical uncertainties in key export markets may dent the overall growth.

With normal monsoon expected for this fiscal, TVS Motor expects rural recovery to drive sustained momentum for the industry in the coming quarters. Management expects the 2W industry to post 10 per cent plus growth for FY25E.

Motilal Oswal Financial Services said they remain optimistic about domestic 2W demand growth over the next two years, driven by a strong recovery in rural demand. TVS's domestic growth will be supported by new product launches, but geopolitical uncertainties are likely to continue to affect exports (about 24 per cent of total volumes) thereby limiting its growth opportunities. The brokerage firm reiterates Neutral with a target price of ~Rs 2,265 (premised on ~28x Jun’26E EPS + Rs 201/share for NBFC).

Meanwhile, with improvements in road infrastructure and increasing mobility demands, the two- and three-wheeler industry is waiting to see a greater demand surge in the future, TVS Motor said in its FY24 annual report. The company aims to capitalise on the opportunities by deepening our international presence in the African, Latin American, European, Southeast Asian, and Middle Eastern markets.

Export of 2Ws is anticipated to see recovery in FY 2024-25. The African market is expected to show improvement in recovering from the global slowdown and moderation of inflation. Expansion initiatives in LATAM, ASEAN, and the Middle East will provide additional momentum, the company said.

“With a substantial demand base, robust infrastructure development, strong fundamentals, and diversified sectoral strength coupled with increased global investments, India is well-positioned to maintain its growth trajectory in FY 2024-25,” TVS Motor said.