Robust Q4; guides to sustain outperformance vs 2W industry
TVSL logged a strong Q4, with revenue up 34% YoY, led by 28% YoY volume growth and 1.5% higher ASP QoQ. EBITDA was up 26% YoY, with EBITDAM stable QoQ at 13.1%. The management guides for strong single-digit growth for the domestic 2W industry (aided by strong underlying demand). TVSL aims to outpace this via its diversified product portfolio (across ICE/EV scooters, premium motorcycles) and capacity expansion (by 1.5mnpa units in FY27 to 8.3mnpa units; expansion in FY28/FY29 is also under evaluation). Economy 2Ws are facing a challenge due to rising product prices and elevated fuel price fears; here, TVSL’s exposure is limited (5%/4% of its 2W/total volumes). E- 2Ws and E-3Ws are growing strongly, and momentum is expected to sustain in FY27, with TVSL targeting share gains aided by a strong multi-variant E-2W portfolio and recent product launches in E-3Ws. Commodity cost pressure is expected to persist. However, an improving product mix (higher share of scooters and premium motorcycles), strong scale benefits, and calibrated price hikes (35% of the 3-5% commodity cost impact offset so far) should aid in countering the pressure and improve margins. While logistics have been a challenge, export demand is robust across markets (Africa/LatAm/Asia) with TVSL gaining market share owing to its strong product portfolio. We continue to like TVSL on a structural basis, due to its premiumization-led growth, strong margin footprint, and being a key beneficiary of India’s EV transition (refer: Yet another mega shift in motion, Ather the front runner). We retain BUY and TP of Rs4,800, at 35x FY28E core PER.
