Business News/ Markets / Mark To Market/  TVS Motor is gradually gaining a grip in electric vehicle segment

For TVS Motor Co. Ltd, increasing electric vehicle (EV) penetration was flagged as a key risk as the automaker derives a significant portion of its volume from internal combustion engine (ICE) scooters. This segment is the most vulnerable to rising EV adoption.

But with TVS focusing on electrification, volumes of its EV product, iQube have risen. As such, the automaker’s market share in the electric two-wheeler (2W) segment has increased from almost 2% in January 2022 to 20% in March 2023 so far.

In CY23-to-date, TVS holds the second spot in terms of market share in the electric 2W segment. Ola Electric currently holds the top spot with nearly 27% market share.

TVS’ March-to-date electric 2W market share is comparable to 24% market share in ICE scooters, said analysts at Jefferies India. “With its market share in electric 2Ws approaching that in ICE scooters, TVS is turning the electrification risk into an opportunity," they added.

What’s more, TVS plans to launch more products in the EV segment, which would further aid volumes. Electric 2W volumes formed 5-6% of total 2W wholesale volumes in January-February.

On the ICE front as well, the automaker has gained market share over FY17 to FY23-to-date. For perspective, in scooters, TVS market share has increased from 15% to 24% over this period, said Jefferies. Further, the company has managed to battle cost pressures and report consistent margins.

In fact, this was one reason that led to nearly 73% appreciation in TVS stock over the past one year besides the company’s improving prospects in EV segment.

All said, the outlook is not encouraging. The demand environment in both domestic and export markets is currently muted. A pick-up in the rural economy would aid demand in domestic markets and the favourable budget announcements would aid in this endeavor.

But the recovery in export markets is likely to take a while given the headwinds in the form of a weak macro environment and unavailability of dollars. “We cut FY23-25E earnings per share (EPS) by 3% on lower export volumes but still expect EPS to almost treble over FY22-25E," said Jefferies.

Meanwhile, shares of TVS trade at attractive valuations at almost 24 times their FY24 estimated earnings, according to the broking firm. They believe valuations would expand if TVS continues to gain share in electric 2Ws.

Vineetha Sampath
Vineetha Sampath is a chartered accountant and is experienced in the field of research analysis. She joined Mint's Mark to Market team recently and this is her first stint in journalism.
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Updated: 23 Mar 2023, 11:54 AM IST
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