Stock to buy long-term: Why are experts bullish on TVS Motor share ...
TVS Motor Company share price rallied over 2% on Tuesday, extending gains for the third consecutive session. The gains in TVS Motor shares follow the broader market rally, with the Nifty Auto index rising 2.7%.
Analysts believe TVS Motor Company is poised to be a significant beneficiary of the electric vehicle (EV) industry’s growth, supported by its robust pipeline of upcoming EV launches.
Meanwhile, media reports stated the Ministry of Heavy Industries (MHI) has reinstated subsidies for electric three-wheelers under the PM E-Drive scheme.
The government had temporarily halted the disbursement of incentives for electric three-wheelers after the annual subsidy allocation for FY25 was fully utilized. However, the Ministry of Heavy Industries (MHI) has now allocated additional funds for this segment under the broader framework of the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme, according to reports.
The PM E-DRIVE Scheme, recently approved by the Cabinet with a financial outlay of ₹10,900 crore, became effective on October 1, 2024, and will remain operational until March 31, 2026.
The outlook for the two-wheelers and three-wheeler manufacturer, TVS Motor Company, seems positive amid the EV focus, analysts said.
“TVS Motor Company seems to be better placed among the electric two-wheeler and three-wheeler companies. The company’s iQube Electric model has seen decent demand. TVS Motor’s fundamentals also look good. Hence, we are bullish on TVS Motor Company shares. The stock can see ₹2,900 level in a one year time horizon,” Anshul Jain, Head of Research at Lakshmishree Investment and Securities.
TVS Motor Company recorded its highest quarterly revenue during the second quarter of FY25, with a growth of 13% YoY on the back of strong volume growth, a superior product mix, and better realization. The company’s net profit in Q2FY25 rose 23.5% YoY to ₹663 crore.
The company saw two-wheeler domestic volumes growth of 15% YoY, outperforming the industry’s 11% YoY growth. TVS also gained market share in retail growth.
Analysts anticipate TVS Motor’s total volumes to rise by 13% YoY in FY25 driven by favourable festive season, a recovery in rural demand, and an expanded international presence in regions like the Middle East, LATAM, and ASEAN.
In Q2FY25, sales of the TVS iQUBE electric two-wheeler (e2W) grew by 31% YoY, increasing from 57,549 units to 75,122 units.
TVS is also preparing to launch one new electric two-wheeler and one electric three-wheeler, catering to a variety of customer preferences.
“Although all models qualify for the PLI scheme, the company has yet to recognize PLI benefits in its income statement. We expect these benefits to have a cumulative positive impact on the financials by year-end,” said Shridhar Kallani, Auto Analyst at Axis Securities.
Being well-placed among listed players, Axis Securities expects TVS Motor Company’s Revenue / EBITDA / PAT to grow by ~15% / 18% / 25% CAGR over FY24E-27E. The brokerage firm likes TVS Motor Company because of its engineering and R&D capabilities, strong domestic retail network, export recovery and increasing sales volumes from premium offerings in developed countries.
TVS Motor share price has fallen over 9% in one month, but the stock has rallied over 21% year-to-date (YTD). TVS motor shares have delivered more than 40% returns in the past one year.
Kallani expects TVS Motor to deliver a strong ROCE ranging between 23%-26% over the next few years.
“With the competitive intensity increasing over the next few quarters in the EV and mid-weight motorcycle category, we value it at a sustainable premium P/E multiple of 31x on March 2027 core EPS (earlier 33x on Sep’ 26 EPS) and other investments at 1x P/BV and TVS Credit Services at 1.5x P/BV on FY24,” said Kallani.
He has a ‘Buy’ rating TVS Motor Company shares with a target price of ₹2,890 apiece.
At 1:40 PM, TVS Motor Company shares were trading 1.58% higher at ₹2,451.55 apiece on the BSE.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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First Published
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19 Nov 2024, 01:42 PM IST
