Motilal Oswal has increased its FY27 and FY28 profit projections for TVS Motor by up to 11% following strong second-quarter results. The company reported a 43.7% revenue jump, driven by premium product sales and export growth. Investors should monitor upcoming product launches and competition in the electric vehicle segment.
TVS Motor Company has seen a positive revision in its earnings outlook as brokerage firm Motilal Oswal lifted its profit estimates for the fiscal years 2027 and 2028 by up to 11%. This revision follows the company’s recent second-quarter performance, where it outperformed brokerage estimates in operating profit despite facing inflationary pressures on commodity costs.
In the second quarter, TVS Motor reported revenue of approximately Rs 17,100 crore, marking a 43.7% increase compared to the same period last year. Net profit also rose by 52%, reaching Rs 13.8 billion. The company’s ability to manage its bottom line was attributed to a favorable mix of products sold, currency benefits, and strict internal cost-control measures. While gross margins saw a slight contraction of 190 basis points to 37%, the overall EBITDA margin reached 13%, demonstrating the company's operational efficiency in a competitive market.
Key drivers for this growth include a consistent focus on premiumization, where the company is successfully moving toward higher-value products in its domestic portfolio. Additionally, steady demand in export markets has supported its revenue growth. The management’s focus on maintaining margins through cost discipline, despite the volatility in raw material prices, remains a core element of its operational strategy.
Investors, however, should note that the two-wheeler sector is highly competitive. Rivals like Bajaj Auto and Hero MotoCorp are also aggressively expanding their portfolios, particularly in the electric vehicle space. For TVS Motor, the electric vehicle transition remains a critical area of focus. While the company has seen growth in its electric offerings, any significant increase in competition or a shift in subsidy policies could impact future profitability.
Execution risk remains another factor to track. The brokerage’s outlook relies partly on the successful rollout of the company's upcoming product pipeline. Any delays in launching these new models or higher-than-expected marketing spending to gain market share could impact cash flow and margins. Additionally, while current raw material costs are manageable, any unexpected surge in commodity prices could pressure margins further given the intense pricing competition in the mass-market segment.
Looking ahead, market participants will likely track the company’s ability to sustain its export momentum and the actual uptake of its new product launches. Financial indicators like free cash flow, which stood at Rs 2,080 crore in the first half of the fiscal year, will also be important to monitor to assess the company’s ability to fund its expansion without excessive borrowing.