TVS Motor Q1 Results impact: Stock hits new lifetime high, zooms nearly 10% - brokerages divided on counter – here’s why

TVS Motor Q1 Results: Auto company TVS Motor share price touched a new all-time high of Rs 953.05 per share after surging by nearly 10 per cent on the BSE intraday during Friday’s trading session. The upward momentum is mainly seen on the back of strong first-quarter earnings in fiscal 2022-23 (Q1FY23). 

The overall quarterly performance of the two-wheeler company was largely in line, according to several brokerages' estimates, as revenue was up 53 per cent year-on-year (YoY) on 38 per cent volume growth 

While gross margins were flat sequentially, mainly on higher input costs pressure, higher USD-INR on exports, and cost reduction efforts, similarly, EBITDA margins were also flat sequentially, largely tracking gross margins trend, brokerages noted quoting TVS Motor Q1 results. 

According to IIFL Securities, TVS outperformed the two-wheeler 2W industry on margin performance in the downturn, improving EBITDA margins over FY18-22. With industry back on the growth path and margin tailwinds from falling metal prices and favourable currency, TVS is set to scale new highs on the margin front, the brokerage said, maintaining a Buy. 

TVS reported 1QFY23 EBITDA above our estimates, Kotak Institutional Equities, and expects that the company’s profitability to improve led by a recent correction in commodity prices and cost-control measures, resulting in 31% EPS CAGR over FY2022-25E. 

However, the company’s domestic ICE scooter portfolio can get impacted as EV adoption picks up, the brokerage noted, retaining a Sell rating with a revised target of Rs 775 per share. The stock trades at 22.5X FY2024E standalone EPS.  

We expect TVS Motor’s outperformance will continue on the volume front, while premiumization and astute cost management would help on the margin front, JM Financial said. considering pick-up in rural sales, robust premium product portfolio and steady export demand, the two-wheeler firm is brokerage’s top-pick in the 2W space.  

JM Financial increased margin estimate by 100 basis points for FY24 and estimate revenue / EPS CAGR of 16%/43% over FY22-24E and reiterate a Buy stance target of Rs 1,000 per share.