Target: ₹3,100

CMP: ₹2,668.70

Lagging our estimated 13.4 per cent, TVS Motor’s Q4 adj. EBITDA margin (excl. PLI benefits pertaining to previous quarters) came at 12.5 per cent due to less-than-expected PLI benefits.

Despite this, our positive stance on the stock is backed by expectations of cyclical upturns in 2Ws (domestic/exports); market-share gains (domestic/overseas); the company’s relentless EV strategy; and margin expansion from rising\ economies of scale and cost-cutting steps.

We expect 14/19/22 per cent revenue/EBITDA/PAT growth over FY26-27. We, thus, retain our Buy rating on the stock, with a slightly higher TP of ₹3,100 (earlier ₹3,050), 35x FY27e EPS (35x FY26e EPS), and value the investment in TVS Credit Services at ₹100/share.

We expect 14/19 per cent revenue/EBITDA CAGRs over FY25-27.

Our estimates broadly remain unchanged. We maintain our Buy rating, with a slightly higher ₹3,100 TP (earlier ₹3,050), 35x FY27e EPS (35x FY26e EPS), and value the investment in TVS Credit Services at ₹100/sh. The multiple applied is +1SD of the historical forward average, considering strong earnings.

Key risks: Less-than-expected demand in key regions, keener competition, failure of new products and adverse movements in commodity prices and currency rates.

Published on April 30, 2025