TVS Motor Company is one of the leading global manufacturers of two & three-wheeler vehicles, driving innovation and progress in sustainable mobility. With state-of-the-art manufacturing facilities in Hosur, Mysuru, and Nalagarh in India, as well as Karawang in Indonesia, TVS is committed to producing high-quality, internationally aspirational products through innovative and sustainable processes. With a legacy of trust, value, and service spanning over 100 years, TVS has built a reputation for excellence. The company’s subsidiary, Norton Motorcycles, is a prestigious brand in the UK, while its e-mobility subsidiaries—Swiss E-Mobility Group (SEMG) and EGO Movement—are leaders in the e-bike market in Switzerland. TVS continues to deliver superior customer experiences across over 80 countries globally.

Recommendation	Accumulation Price	Target Price	Time Horizon
Accumulate	Rs.2,375 – 2,400	Rs. – 2,900	12 Months

Indian Economy Overview

India’s economy is projected to grow at 6.5% in FY2025, driven by strong domestic demand, strategic government investments, and expansion across key sectors. The industrial sector has demonstrated resilience, with manufacturing and mining contributing positively to the Index of Industrial Production (IIP). The services sector, particularly trade, transport, and financial services, remains a key growth driver. Active fiscal and monetary policies from the Government and RBI have fostered this growth, with the RBI maintaining a consistent stance on lowering interest rates to support industrial expansion and stabilize the INR. Core inflation has moderated and is expected to ease further with normal monsoons anticipated in the coming fiscal year.

The government’s continued push for infrastructure development is evident, with public capital expenditure rising from ₹7.28 lakh crore in FY 2022-23 to ₹10 lakh crore in FY 2023-24, and an additional outlay of ₹11.1 lakh crore for FY 2024-25. This infrastructure build will enhance short-term economic vitality and long-term quality of life.

As India digitizes, financialization, formalization, urbanization, and premiumization will be significant growth drivers. Strong economic fundamentals, a young skilled workforce, rising discretionary consumption, and improved ease of doing business are transforming India into a prime destination for FDI. According to the IMF, India is projected to become the world’s third-largest economy by 2027.
Indian Automotive Industry Performance

The Indian automotive industry recorded a growth of 3.1% in Q3 FY25, as per the Society of Indian Automobile Manufacturers (SIAM) report, driven by the country’s macroeconomic stability, which fostered growth across various vehicle segments. During the period from April to December 2024, the industry grew by 9.2%, with significant contributions from the two-wheeler, three-wheeler, and passenger vehicle segments. However, the commercial vehicle segment faced a decline.

The passenger vehicle industry saw the highest YoY growth of 4.5% in Q3 FY25, with 1,058,145 units sold in 2024 compared to 1,012,285 units in 2023. The two-wheeler industry continued its strong performance, registering a 3% YoY growth, with 48,74,590 units sold, up from 47,31,436 units in Q3 FY24. The commercial vehicle segment showed modest growth of 1.2%, with 2,38,050 units sold, compared to 2,35,262 units in the same period last year. The three-wheeler segment posted marginal growth of 0.2%, with 1,88,853 units sold in Q3 FY25, slightly up from 1,88,434 units in Q3 FY24.

For the full fiscal year, the passenger vehicle industry grew by 1.8% YoY, with 31,39,288 units sold in FY25 compared to 30,83,245 units in FY24. In contrast, the commercial vehicle segment experienced a 2.3% YoY decline, with 6,83,471 units sold. The three-wheeler segment expanded by 6.4%, with 5,62,652 units sold, while the two-wheeler sector saw the highest growth of 11.6%, with 1,50,39,570 units sold in FY25 compared to 1,34,70,842 units in FY24.

Management Commentary on the business & its future prospects:

1. Market Outlook: TVS Motor is optimistic for Q4, expecting strong rural market growth driven by better crop forecasts, infrastructure investments, and favourable weather. The company anticipates continued growth in both domestic and international markets, with rural trends and infrastructure development as key growth drivers.
2. OBD2B and Price Hikes: The OBD2B phase change, effective from April 1, 2025, will introduce minimal price hikes. TVS anticipates slight price increases, similar to the 1.5%-2% observed during previous regulatory transitions, while preparing products for compliance.
3. Gross Margin Stability: Despite a growing EV share, TVS Motor has maintained stable gross margins. This is due to effective product mix management, material cost reductions, and competitive pricing strategies, ensuring margin stability amid rising electric vehicle sales.
4. Operating Leverage and Employee Costs: TVS has seen increased employee costs due to investments in new technologies and capacity building. These are considered strategic for future growth, especially in EVs, with expected returns in the next 2-3 years, though short-term costs will rise.
5. PLI Benefits and Q4 Expectations: TVS expects to recognize Production-Linked Incentive (PLI) benefits in Q4 FY2025, with the iQube EV approved under the scheme. This will positively impact revenue and margins, with ongoing quarterly PLI recognition thereafter.
6. Electric Two-Wheelers Growth: TVS has expanded its electric scooter network to nearly 900 dealerships. The iQube EV and traditional models like Jupiter and Ntorq aim to capture market share as the scooter market in India reaches 40% penetration.
7. Rural Market Recovery: TVS is optimistic about continued growth in rural markets, now performing similarly to urban areas. Good monsoon conditions and favourable economic factors are expected to sustain growth into FY2025, although challenges persist in entry-level segments.

Q3FY25 Result Analysis

1. Revenue Performance: In Q3FY25, the company reported a revenue from operations of INR 11,134.63 crore, reflecting a growth of 10.1% compared to INR 10,113.94 crore in Q3FY24 on a YoY basis. However, on a QoQ basis, the revenue declined by 1.47% from INR 11,301.68 crore in Q2FY25.
2. Profit after tax: The Company reported a profit after tax (PAT) of INR 609.35 crore, marking a YoY increase of 19.6% from INR 509.61 crore in Q3FY24 and a 6% increase compared to INR 588.13 crore in Q2FY25.
3. EBITDA Performance: For Q3FY25, the company’s EBITDA stood at INR 1,643.75 crore, showing an 11.4% growth from INR 1,475.21 crore in Q3FY24 on a YoY basis. On a QoQ basis, EBITDA grew marginally by 1.24% from INR 1,623.54 crore in Q2FY25.
4. EBITDA Margin: The EBITDA margin improved to 14.76% in Q3FY25 from 14.59% in the same quarter last year, and from 14.37% in the preceding quarter, indicating strong operational efficiency.
5. The Company recorded sale of 35.3 Lakh units, grew by 13% during the nine months period as against 31.3 Lakh units reported in the nine months period of last year

Profit and Loss Statement:

Particulars (In Cr)	FY24	FY23	FY22
REVENUE
Revenue From Operations	39144.74	31973.99	24355.31
Other Income	105.82	138	32.87
Total Revenue	39250.56	32111.99	24388.18
EXPENSES:
Cost of Materials Consumed	23717.91	20096.24	15938.65
Purchases of Stock-in-Trade	1011.69	890.95	579.04
Changes in Inventories of Finished Goods, WIP and SIT	-324.35	-140.93	-260.4
Employee Benefits Expenses	3385.19	2890.25	2124.62
Finance Costs	1927.72	1367.89	940.22
Depreciation and Amortization Expenses	975.12	858.86	742.86
Other Expenses	5810.89	4170.1	3218.77
Total Expenses	36504.17	30133.36	23283.76
Profit before Exceptional and Extraordinary Items and Tax	2702.92	1937.9	1106.91
Exceptional Items	0	-1.87	-40.12
PBT	2702.92	1936.03	1066.79
Tax Expenses	924.38	626.57	335.91
PAT	1778.54	1309.46	730.88

Balance Sheet:

Particulars (In Cr)	FY24	FY23	FY22
SOURCES  OF  FUNDS :
Share Capital	47.51	47.51	47.51
Reserves Total	6736	5457.49	4351.94
Total Shareholder’s Funds	6783.51	5505	4399.45
Minority Interest	727.6	404.85	653.56
Secured Loans	22466.05	17029.99	11280.25
Unsecured Loans	3539.65	5345.59	4546.96
Total Debt	26005.7	22375.58	15827.21
Other Liabilities	301.68	268.4	250.97
Total Liabilities	33818.49	28553.83	21131.19
APPLICATION OF FUNDS :
Gross Block	11760.81	10819.8	10468.65
Less: Accumulated Depreciation	5869.99	5071.77	4494.01
Net Block	5890.82	5748.03	5974.64
Capital Work in Progress	1032.95	743.45	551.53
Investments	1123.19	967.25	604.56
Current Assets, Loans & Advances
Inventories	2248.4	1921.51	1642.36
Sundry Debtors	1839.42	1256.42	1177.3
Cash and Bank	2425.73	1879.11	1535.61
Loans and Advances	14843.27	11775.32	8402.13
Total Current Assets	21356.82	16832.36	12757.4
Less : Current Liabilities and Provisions
Current Liabilities	8004.29	6338.92	5680.49
Provisions	201.22	131.79	107.42
Total Current Liabilities	8205.51	6470.71	5787.91
Net Current Assets	13151.31	10361.65	6969.49
Deferred Tax Assets	584.95	466.04	359.15
Deferred Tax Liability	387.13	368.68	348.83
Net Deferred Tax	197.82	97.36	10.32
Other Assets	12422.4	10636.09	7020.65
Total Assets	33818.49	28553.83	21131.19

Cash Flow Statement:

Particulars (In Cr)	FY24	FY23	FY22
Cash and Cash Equivalents at Beginning of the year	1851.19	1445.68	1573.76
Net Cash from Operating Activities	-1252.67	-4404.81	-1575.19
Net Cash Used in Investing Activities	-1001.36	-1307.76	-1470.91
Net Cash Used in Financing Activities	2758.64	6118.08	2918.02
Net Inc/(Dec) in Cash and Cash Equivalent	504.61	405.51	-128.08
Cash and Cash Equivalents at End of the year	2355.8	1851.19	1445.68

Outlook:

TVS Motor is a leading manufacturer of Two & Three-wheeler vehicles, offering a diverse range of products with a strong global presence across regions such as the Middle East, Africa, Southeast Asia, the Indian subcontinent, and Latin & Central America. The company is actively expanding its market share in the electric vehicle (EV) Two-wheeler segment and also enhancing its product portfolio by introducing premium Two-wheeler bikes to meet evolving customer demands.

Over the past nine months, the company reported a revenue of Rs 32,843.17 crore, reflecting a 12% growth on YoY basis. And it reported a PAT of Rs 1,682.30 crore, marking a 23% growth YOY basis, and an EBITDA margin of 14.35%. The company also posted an EPS of Rs 33.41 and is currently trading at a TTM P/Ex of 58.6.

Given the company’s robust financial performance, strategic investments in subsidiaries, partnerships, the launch of electric vehicle (EV) products, and strong management guidance for margins and the outlook for Q4 FY25, we believe TVS Motor is well-positioned for continued growth.

Based on these factors and our expectations, We recommend that investors accumulate TVS Motor stock within the price range of Rs. 2,375–2,400, with a target price of Rs. 2,900 over the next 12 months.

 Source: Company website, EWL Research

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