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TVS Motor, India's two and three-wheeler giant, has seen a sharp rally in its stock. TVS Motor's share price gained 9% to ₹2,539 as of 10:45 AM on January 29, 2025. The stock saw a 3-week high as the company announced its third-quarter (Q3) earnings. Though it had reported a profit miss for the quarter, the positive ratings from analysts and growth prospects have seen the stock going up.
TVS Motor's Q3 results were mixed for FY25. The company reported a modest 4.2% year-on-year (YoY) increase in standalone net profit. The profit reached ₹618 crore compared to ₹593 crore in Q3 FY24. However, the growth was slower than anticipated, and the company missed profit estimates slightly. Revenue from operations increased by 10% to ₹9,097 crore, up from ₹8,245 crore in the same period last year.
The operating EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the quarter showed a strong growth of 17%. This was an increase to ₹1,081 crore from ₹924 crore in the previous year. Thus, resulting in an operating EBITDA margin of 11.9%, an increase from the 11.2% margin reported in Q3 FY24.
It reported a 10% increase in total unit sales, selling 12.1 lakh units for the quarter under review compared to 11 lakh units in the same period last year. The growth in two-wheelers was not quite as brisk. However, it was enough for the positive operating numbers to help TVS Motor's stock close 5% higher on the day of the earnings release.
TVS Motor trading chart on Jan 29 as of 11.02 am is as follows:
As of 11.25 am, the trading price for TVS Motors shares is Rs 2504.50 with a 7.22% rise. The day’s range can be between a high of Rs 2,539.20 and a low of Rs. 2,356.80. The trading volume stands at 1,947,066 shares, exchanging hands with a market capitalization of approximately Rs 119,322 crores. The TVS Motor stock shows a high P/B ratio of 15.37 with a Beta of 1.08.
The current Classic resistance and support levels are as follows:
R1 2,401.45
R2 2,467.10
S1 2,243.60
S2 2,151.40
Despite the quarterly profit miss, brokerages have maintained their optimistic outlook on TVS Motor's future performance.
Global brokerage firm Macquarie retained its 'Outperform' rating on the stock, with a target price of ₹2,857. The brokerage highlighted that the company demonstrated a modest EBITDA beat due to better gross margins. Macquarie believes that market share gains and expected margin expansion at TVS Motor will fuel industry-leading earnings growth. Thus, driving the long-term performance of the stock.
JP Morgan repeated the 'Overweight' call on TVS Motor with a target price of ₹3,130. The firm pointed out that market share in domestic as well as international markets is increasing for TVS Motors.
Nuvama Institutional Equities reiterates a similar call, seeing domestic market share growing from 17% in FY24 to 18% in FY27E. It also expects the company to experience margin expansion over the next quarter with the benefits from PLI (Production Linked Incentive).
The domestic two-wheeler market share of TVS Motor has expanded from 15% in FY19 to 17% in FY24. The company has a sleuth of various successful product launches like Jupiter, Zest, Ntorq, iQube, and Raider last year. The strong performance in both ICE executive/premium motorcycles and EVs is expected to continue driving market share growth in the future.
Not everyone is optimistic here. Motilal Oswal had a 'Neutral' on the stock with the target price set at ₹2,570. As much as this brokerage welcomed TVS Motor into the league with the newly introduced Jupiter 110 scooter. Its concern was that under the motorcycle banner, the 125cc sector, which the company has taken maximum growth strength from in past years, underperformed compared to its competitors.
The brokerage further added that even though the export market is recovering, this full recovery is not so forthcoming. This may later be a problem for TVS Motors’ performance in international markets.
The TVS Motor share price reaching ₹2,539 shows a high level of investor confidence in the company. Brokerages continue to be bullish about the company, expecting a positive outcome on an increasing share market, rising margins, and the growth of the EV segment. However, risks associated with the motorcycle business and sustained export market recoveries persist.
