Prabhudas Lilladher has given Buy recommendation for TVS Motors with a target price of Rs. 795 in its research report issued on May 06, 2022

Prabhudas Lilladher’s research report on TVS Motors

TVS reported EBITDA margin at 10.1% (PLe: 10.3%; flat YoY) despite commodity cost pressures, supported by price hikes (~1.5% QoQ) and higher exports (37% of total volumes vs 34% QoQ). Management highlighted strong product pipeline over FY23 for ICE and EV models (one new EV model launch in 1QFY23). Its EV facility of 10kunits/month will be operational in 1QFY23 while current order book for TVS iQube is ~12k units. Management remains confident of growing ahead of the market in FY23 driven by comeback of rural demand supported by monsoons, strong reception of new models and export momentum. We believe TVS will be able to sustain growth momentum driven by (1) new product launches in ICE & EV segments along with its revamped product portfolio (2) strong exports and (iii) margin protection through cost reduction efforts and price hikes.

Outlook

We expand our EBITDA margin estimates by ~50/70bps to factor in margin protection through price hikes and cost controls. Maintain ‘BUY’ rating with revised target price of Rs 795 at 23x on FY24E EPS and Rs 34 for TVS Credit.

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