TVS Motor shares spike 4% to new all-time high after UBS lifts target price to ₹3,200

Shares of TVS Motor, India's leading two-wheeler manufacturer, rose 4.10% in early morning trade, reaching an all-time high of ₹2,818 per share. The surge followed a target price upgrade by global brokerage firm UBS, which raised its target price on the stock to ₹3,200 from the previous target of ₹3,000 while maintaining a “buy” rating.

UBS cited the recent launch of the all-new Jupiter 110 scooter, featuring a next-generation engine and first-in-segment, futuristic features, as a key factor in its revised outlook.

The Jupiter model has played a pivotal role in TVS Motor's success in the scooter segment, driving a 16.5% year-over-year increase in domestic sales to 1.45 million units in FY24, per the company's latest annual report. 

UBS noted that the newly launched Jupiter scooter is a significant upgrade over its predecessor and competitors while maintaining a similar price point. The firm expects its new launch to add an estimated 15,000 to 20,000 units to TVS Motor's sales volume, which could represent around 7% of the company’s two-wheeler sales and about 5% of its overall sales volume.

UBS also highlighted additional growth catalysts for TVS Motor with the anticipated launch of a new electric two-wheeler (e-2W) and the company's entry into the electric three-wheeler (e-3W) market in the coming months.

Nomura sees TVS outperforming industry across segments

Analysts remain optimistic about TVS Motor’s growth prospects, particularly following the company's strong performance in the quarter ending June. Japanese brokerage firm Nomura highlighted that TVS is likely to outperform the industry across segments following its robust first-quarter results for FY 2025.

Nomura suggested that successful future product launches could lead to market share gains and higher volume growth compared to the industry average. However, the firm also cautioned that rising competition could put pressure on margins. 

Nomura reported that the company has invested ₹12 billion in Norton so far, and while the company has faced some losses, management expects to break even within a year.

Global brokerage firm Jefferies also maintains a “buy” rating on TVS Motor, raising its price target to ₹3,000, the second highest on the street. Jefferies anticipates that TVS’s earnings per share (EPS) could more than double over the next three years. The brokerage expects that TVS’s “premium multiples will be sustained by its strong growth outlook, especially as rural demand for motorcycles recovers.”

For the June quarter, TVS Motor reported a better-than-expected first-quarter profit, driven by strong demand for its two-wheelers and healthy margins. The company's profit increased by 23.5%, reaching ₹5.77 billion ($68.77 million) compared to the same period last year.

During this quarter, total two-wheeler sales in India grew by 20.4%, with TVS's sales rising by 14.1% to surpass one million units.

Analysts attribute the company's strong performance to the increased sales of premium motorcycles like the 'Apache' series, expanding electric vehicle (EV) volumes, and a recovery in exports.

Quarterly exports, including the iQube series of EVs, grew by 11.5%, according to its annual report. Exports account for nearly a quarter of TVS's overall revenue. 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.