TVS continues to flag rare-earth magnet crisis, hopes GST reforms to boost H2 sales

TVS Motor Co. Ltd, India’s third-largest two-wheeler maker, on Tuesday reiterated short- to medium-term concerns over the availability of rare-earth magnets, calling it a key challenge for its electric vehicle (EV) business.

However, it said, while announcing the September quarter results, the recent goods and services tax (GST) rate cut—fully passed on to customers—is expected to have a “multiplier effect”, supporting sales growth in the December and March quarters.

The EV business

In the second quarter of 2024-25, the company’s EV sales—e-scooters, e-motorcycles, and e-auto rikshaws—grew by 15% sequentially to 80,000 from 70,000. EV sales stood at 75,000 in the year-ago quarter.

“(Rare-earth) magnet availability continues to pose challenges in the short to medium term,” the management said during the post-earnings investor call.

“So, possibly if the magnets were available, I am very sure the industry would have done much, much bigger. It is only 8% growth," said K.N. Radhakrishnan, director and chief executive, TVS Motor.

Demand for EVs continues to be strong, he added. Turnover from the EV business was around ₹1,269 crore, and the “contributory margins in the segment were positive”.

The GST rate cut boost

The GST rate cuts are expected to boost demand in the second half of the fiscal year across various categories.

“GST reforms will help rural sales. Overall, I am confident rural will start growing in line with urban, and you will see the growth in the coming days,” Radhakrishnan said.

Savings for entry-level two-wheelers, including mopeds and motorcycles, amount to around ₹7,000, a move the company said would support industry growth.

The company's overall sales, including in international markets, grew by 18% sequentially to 1.5 million units from 1.3 million units. Compared to the year-ago quarter, sales rose 23% from 1.23 million units.

Revenues rose 15% sequentially to ₹14,051 crore from ₹12,210 crore, and 26% annually from ₹11,197 crore, primarily driven by higher demand.

TVS managed to contain expenses, resulting in a boost to its profitability, as net profit jumped 30% sequentially to ₹833 crore from ₹643 crore, and 42% annually from ₹588 crore.

“Among brands, TVSL, Suzuki, and Royal Enfield continued to outperform with market share gains, while Hero Moto Corp. (HMCL) saw healthy rural-led growth,” Yes Securities analyst Deep Shah wrote in a 26 October note.

“While the new Jupiter 110 is a large driver for incremental sales, as highlighted in previous check notes, traction for other brands, especially Ronin and Apache (in non-strong markets), is building up. For example, TVSL’s market share in Gujarat increased to 13% now vs 9% in FY25. A large part of the share gain is from HMCL,” he added.

Shares of TVS Motor closed 2.31% lower at ₹3,555.00 on BSE, even as the benchmark Sensex ended 0.18% down.