TVS Motor share price gains over 2% on robust Q1FY24 numbers; here’s what brokerages say

TVS Motor share price rose over 2% on Tuesday's session following company's robust Q1FY24 (April-June) earnings. TVS Motor share opened at an intraday high of ₹1,343.95 apiece on BSE. TVS Motor share price is hovering near its 52-week high level.

On Monday, TVS Motor reported an 42.2% year-on-year (YoY) rise in its consolidated net profit for the fiscal's first quarter ended June (Q1FY24) to ₹434.30 crore. TVS Motor's consolidated total revenue from operations rose 23.8% on year to ₹9,055.51 crores during the quarter ended June from ₹7,315.70 crore in Q1FY23.

TVS Motor stated in an exchange filing that it achieved its highest operating EBITDA ever of ₹764 crores for the first quarter of 2023–24, representing a 27% increase over the first quarter of 2022–23.

On the technical front, as per trendlyne data, the TVS Motor stock price rose 47.6% and outperformed its sector by 16.5% in the past year.

"Yesterday, the TVS Motor stock price were under pressure after a positive start, today as well prices have started on a positive note but not holding to higher levels. It seems prices have entered a consolidation phase with yesterday volatile trading range to act as trading zone, 1380 - 1300 is the range, next directional move only beyond this range," said Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One.

What do brokerages say?

Nuvama Institutuional Equities

TVS Motor reported revenue and EBITDA growth of 20% and 27% year over year to ₹72.2 billion and ₹7.6 billion, respectively, in Q1FY24, according to the brokerage's report. This was above expectations. The company has been outperforming the domestic market thanks to the success of its new products, a strong position in the scooter market, and growing market penetration in the executive and luxury motorcycle segments. Brokerage anticipates that this trend will continue.

The brokerage reported that TVS Motor is anticipated to post revenue/EPS CAGRs of 12%/27% for the period of FY23 to FY25E. The brokerage house expects RoE to remain over 28% for the period of FY23 to FY25, driven by improved margins. FCF creation would continue to be strong, averaging roughly ₹18 billion per year throughout FY24–25E. With a target price of ₹1,510, the brokerage has kept its "buy" recommendation.

Motilal Oswal Financial Services

According to the brokerage, TVS Motor's operating performance in the first quarter of FY24 was consistent. The EBITDA margin for TVS Motor was the highest ever, coming in at 10.6% (+30bp QoQ; in line). Due to operating leverage benefits and price increases, EBITDA margin will increase to above 11% over the next several quarters as material prices are anticipated to continue favourable.

A resurgence in the domestic 2W market, new products, and a comeback in exports are projected to be the main drivers of volume growth. TVS Motor benefits from economies of scale and operating leverage, which enable it to maintain an EBITDA margin in the double digits. However, TVS Motor is sensitive to EV disruption because the domestic scooter sector accounts for around 40% of its entire EBITDA.

"Valuations at 29.9x/26.2x FY24E/FY25E EPS largely reflect its strong earnings growth as well as increasing risk of EVs. Reiterate 'Neutral' with a target price of about ₹1,300," said the brokerage.

TVS Motor Q1 Results: Net profit jumps 42.2% on year to ₹434.30 crore