Analysts raise TVS Motor target price as margins surprise, growth firms up

Brokerages have turned incrementally more constructive on TVS Motor Company after its December quarter (Q3FY26) performance delivered a margin surprise and reinforced confidence in sustained outperformance. 

 

All major brokerages tracking the TVS Motor Company stock have raised their target prices following the Q3FY26 results, citing strong operating leverage, favourable product mix and improving export momentum, even as commodity cost pressures remain a near-term watch point.

 

TVS Motor reported a robust 37 per cent year-on-year (Y-o-Y) rise in revenue in the December quarter, supported by healthy volume growth and steady realisations. Ebitda surged 51 per cent Y-o-Y to about ₹1,630 crore, while margins expanded to 13.1 per cent, beating most Street expectations. Adjusted profit after tax rose 57 per cent Y-o-Y to ₹970 crore, reflecting the benefits of scale, premiumisation and cost efficiencies.

 

 

Nomura said the company’s industry-leading performance is likely to continue, maintaining its ‘Buy’ rating while raising the target price to ₹4,159, implying an upside of about 12 per cent from current levels. The brokerage noted that Q3 margins exceeded consensus expectations, with commodity cost hikes largely passed on. “We still expect TVS’s margins to keep expanding on a weaker rupee and operating leverage as its scale approaches that of larger peers,” Nomura said, adding that EV gross margins are already positive and improving.

Demand tailwinds across segments

Management commentary during the earnings call strengthened the growth narrative, particularly for the domestic two-wheeler (2W) market. The company expects industry volumes to grow over 15 per cent in the March quarter and around 8-9 per cent over the long term, with TVS continuing to outperform. Premium segments are expanding faster than entry-level categories, while scooters are seeing faster growth than motorcycles. Rural and urban markets posted near-parity growth of about 19 per cent and 21 per cent, respectively, in the quarter.

 

JM Financial highlighted that margin expansion on a like-to-like basis (adjusting for PLI benefits) was driven by a favourable mix, operating leverage and cost reduction initiatives. It expects consumer sentiment to strengthen further on the back of GST rationalisation, potential repo rate cuts and improving financing availability. JM Financial rolled forward its valuation to FY28 and raised its target price to ₹4,350 (₹4,150 earlier), reiterating that TVS is well positioned to outperform industry growth led by premiumisation and new launches, including EV products. The brokerage retained its ‘Buy’ rating.  ALSO READ | Strong order visibility, rich valuations divide analysts on BEL post Q3

Exports, EVs add to momentum

 

Exports were another bright spot, with management pointing to strong recovery in Latin America, Africa and Asia, alongside improving trends in Sri Lanka. Emkay Global said export volumes were up 36 per cent Y-o-Y in the first nine months of FY26, indicating broad-based recovery in key overseas markets. While Europe remains challenging, brokerages believe export growth will outpace industry averages as TVS gains market share.

 

Emkay retained TVS Motor as its top pick in the two-wheeler space, raising its sum-of-the-parts-based (SoTP) target price by 7 per cent to ₹4,500. The brokerage retained its ‘Buy’ rating. Analysts expect limited margin impact of 30-40 basis points (bps) from commodity inflation, which should be offset by calibrated price hikes, premiumisation and cost mitigation measures. It also flagged TVS as a key beneficiary of India’s EV transition, with new EV two-wheeler and three-wheeler launches gaining traction.

 

According to reports, Morgan Stanley, too, maintained its ‘Overweight’ stance and raised its target price to ₹4,280 from ₹4,022. The brokerage cited FX tailwinds, mix improvements and operating leverage as key factors that should offset commodity pressures. It raised its volume and revenue estimates by 4-5 per cent for FY26-28 on expectations of sustained margin expansion.  ALSO READ | Maruti Suzuki Q3 hit by costs as volume push keeps margin pressure alive

Valuation comfort despite premium

 

Motilal Oswal said TVS’s consistent market share gains across domestic and export segments, coupled with gradual margin improvement, support its premium valuation. It reiterated its ‘Buy’ rating with a target price of ₹4,461, valuing the stock at 36 times December 2027 earnings. The brokerage expects revenue, Ebitda and profit to grow at compounded annual rates of 21 per cent, 26 per cent and 29 per cent, respectively, over FY25-28.

 

While brokerages broadly agree on the medium-term positives, risks remain. Nomura flagged near-term commodity cost pressure, intensifying EV competition and the possibility of higher cash outflows due to overseas investments as key concerns. Nonetheless, with margins surprising on the upside and growth visibility improving across domestic, export and EV segments, Street confidence in TVS Motor’s trajectory appears firmly intact.

   

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