TVS Motor Company share price: 5 key reasons why Jefferies expects 18% upside for the stock after Q4 Results

Stock Market Today: TVS Motor Company share price dipped up to 5% on Tuesday during the intraday trades, a day after Q4 results.

TVS Motor's Q4 net profit increased 76% year over year to ₹852 crore, while revenue increased 17% > the same was led by robust EV sales.

Here are 5 key reasons why Jefferies expects 18% upside for the stock

1. Strong quarter: The Q4 Earnings before interest tax depreciation and amortizations or Ebitda , excluding prior quarter PLI incentives, rose 27% YoY, which as per Jefferies was inline with their ex-PLI, estimates. Volumes grew 14% YoY while Average selling price was up 3% sequentially . Ebitda margin rose 60bps sequentially a new high of 12.5% as per them.

2.Subdued domestic demand but recovery ahead: Although FY25 was still 6% behind FY19, the two-wheeler industry wholesales grew at a 15% compound annual growth rate over FY22-25, following a 35% decline in two-wheeler volumes over FY19-22. Demand has softened in recent months and TVS expects industry to be flattish year on year growth in April, though expects a subsequent improvement and FY26 industry growth to be similar to FY25 (up 8% YoY), said Jefferies They remain optimistic on two whelers and expect demand boost ahead from income tax cuts, easing liquidity, and PSU wage hikes in FY27. They expect 10% industry CAGR over FY25-28.

3. Exports to remain firm- India's two-wheeler export volumes increased 21% in FY25 after declining 22% in FY22–24, but they were still 6% below FY22. Although TVS was optimistic about growth in FY26, supported by an African recovery, though there is some risk associated with increased global macro concerns. For FY25–28 Jefferies estimates an 11% CAGR for India's two wheeler exports.

4. Rising Market share- Despite the negative shift in demand away from mopeds, TVS's domestic two wheeler market share increased to an 18-year high of 18% in FY25. During FY14–25, TVS gained a 21% market share in Electric Vehicles and doubled its market share in motorcycles and ICE scooters.

5. Improving margins: TVS' Earnings before interest, tax, depreciation and amortisation margin has increased from an average of only 6.4% in FY10-17 to 12.3% in FY25 (11.8% ex-PLI). By FY28 Jefferies anticipate growth to 14% as TVS's pricing power should be further reinforced by growing demand and franchise.

Jefferies expects 13% volume and 24% Earnings Per Share CAGR (compound annual growth rate) over FY25-28 and their FY26-27 EPS estimates are 4-10% above street. Jefferies has a Buy ratings for TVS Motor Company share price with a price target of ₹3,300

This means an upside of around 18% for the TVS Motor Company share price . The TVS Motor Company share price closed at close to ₹2700 levels

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