Prabhudas Lilladher has given Buy recommendation for TVS Motors with a target price of Rs. 658 in its research report issued on Apr 27, 2021

Prabhudas Lilladher’s research report on TVS Motors

TVSL reported healthy beat to our EBITDA/PAT estimates by 12.4%/20%. We were surprised with QoQ gross margins expansion by 80bp at 24.7% (PLe 23%) as cost control (100bp) and price hikes offset RM impact. We expect near term volume challenges withstanding due to lockdown, while double digit EBITDA performance to sustain backed by further cost reduction efforts and price increase (April price hike of 1.6%). Further sharp improvement in Indonesia subs profitability with PBT of USD3m (v/s PBT loss of USD5.8m) and balance sheet turning net cash are key upgrade catalysts. Further management reiterated aggressive new launches both in India and overseas should help drive continued market share gains.


Hence we raise FY22/23 EPS by 35.1%/26.5% to factor in better realizations and cost control benefits. We upgrade the stock to BUY (from Sell) with revised SoTP based price target of Rs658 (earlier Rs470) at 23x Mar-23 core EPS (v/s 20x earlier at 10% discount to 10 year LPA) and Rs46 for NBFC.