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TVS Motor Co.
Our verdict on TVS Motor Co. isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Three-wheeler sales grew significantly by 46% in Q1 FY26, supporting the company's push into this segment. (1 exceeded, 2 in progress, 2 met across 5 tracked commitments)
“Raghunandhan: Just trying to understand, would this mean that we have started accruing PLI for 3-wheelers? Or would it start from next quarter? K. N. Radhakrishnan: Next quarter.”
Management has launched the TVS iQube in Indonesia during Q1, showing progress on EV expansion, though specific new domestic models for Q1 were not detailed beyond existing variants. (2 in progress, 1 exceeded across 3 tracked commitments)
“Magnet availability continue to pose challenges in the short to medium term.”
Management confirmed the investment number remains similar to previous guidance, specifically mentioning a range of INR 1,600 to INR 2,000 crores for the year. (1 in progress, 1 revised, 1 met across 3 tracked commitments)
“Binay: Right, sir. Sir, just lastly, the investment number that we talked about last time, shall we -- is it the same INR2,000 crores investment this year... K. N. Radhakrishnan: It will be similar. Will be similar.”
In Q1 FY26, domestic ICE sales grew by 8%, which management characterized as moderate growth. They expect this moderate growth to continue into Q2 (July-September). (1 in progress across 1 tracked commitment)
“Overall growth momentum in the domestic market, we are expecting is likely to be like last year.”
The timeline for Norton products hitting the market has been clarified to calendar year 2026, which aligns with the end of FY26/start of FY27. (1 revised across 1 tracked commitment)
“And these products are going to hit the market in 2026 this year. You will see the growth coming, and they are super premium, and it is going to definitely delight the customers globally.”
See the full cited Management analysis of TVS Motor Co.
How durable is the business?
TVS continues to expand its global footprint, specifically entering new markets like Morocco and reaching significant sales milestones for export-specific models like the TVS HLX. (3 expanding)
“TVS Motor Company enters Morocco: Expanding Horizons in Africa... TVS HLX reached 4 Million global sales milestone”
The company's moat is strengthening through heavy R&D investment in software, digital, and analytics. This has led to a decade-long improvement in EBITDA margins from 6% to 12.3%. (2 expanding)
“During 2014-15 Company's EBITDA was at 6% and now this year we are closing with 12.3%. We are confident that the Company will continue to leverage its top line growth, better product mix, sustained cost reduction initiatives, and improve profitability going forward.”
The core ICE (Internal Combustion Engine) business remains the primary revenue driver, with motorcycle sales growing 10% and scooter sales (including EVs) growing 21% for the full year. However, three-wheeler volumes saw a slight contraction of 7.5% for the full year. (5 expanding)
“During the year ended March 2025, the overall two and and three-wheeler sales of TVS Motor Company, grew by 13% at 47.44 Lakh units as against 41.91 Lakh units in the year 2023-24.”
EV sales are expanding rapidly, significantly outperforming the overall growth rate of the company. EV volumes grew by 44% for the full year, reaching 2.79 lakh units, and now represent approximately 5.9% of total unit sales. (4 expanding)
“See, the strength of TVS Motor is very strong R&D and new product development capability. We look at the customer very closely.”
TVS Credit is expanding its role as a strategic moat, with the book size growing to Rs. 26,647 crores and serving 1.9 crore customers. Profitability in this segment grew by 35% YoY. (4 expanding, 1 stable across 2 engines)
“spare parts all put together about INR1,183 crores.”
See the full cited Business Model analysis of TVS Motor Co.
Where does growth come from?
The company has begun accruing PLI benefits across its product range, with the incentive amount increasing compared to the previous quarter. (1 accelerating, 4 new trend across 5 signals)
“It has a little bit gone up. It is about 0.7%... It's a combination of the company and some of the suppliers getting the benefit overall.”
The company is expanding its footprint in international markets like Mexico and Sri Lanka, leveraging popular models like the Jupiter scooter.
“So we see, first of all, we are now building Mexico, okay?... Sri Lanka coming back in a big category is a big, big advantage because Sri Lanka is a big scooter market.”
Profitability is improving due to 'premiumization'—selling more expensive, high-feature models—and better cost management, leading to record-high margins. — Operating EBITDA margin: +120 basis points YoY
“The company's operating EBITDA margin improved by 120 basis points at 13.1% as against 11.9% during Q3 of last year.”
Profitability margins are accelerating, reaching a record 14.0% in Q4, driven by operational efficiencies and government incentives. (1 accelerating, 2 steady across 3 signals)
“Operating EBITDA for the year improved by 120 bps at 12.3% over the last year... The Company’s Operating EBITDA margin is at 14.0% in Q4.”
TVS Credit is seeing steady expansion in its book size and customer reach, adding 41 lakh new customers in the first 9 months of the fiscal year. (1 steady across 1 signal)
“The book size is INR29,678 crores, grew by 9% over last year Q3. TVS Credit PBT before exceptional items for the quarter grew by 21%.”
See the full cited Future Growth analysis of TVS Motor Co.
What could break the thesis?
The risk is intensifying; management noted that European markets are going through 'very, very tough times,' impacting the e-cycle business (SEMG). (1 intensifying, 1 stable, 2 easing)
“while there are some impact on the duty, we are also looking at localization. So we are not seeing a serious impact at this point of time because the volumes are low”
EASING. Operating EBITDA margins improved significantly to 12.3% for the full year (up 120 bps) and reached 14.0% in Q4 (12.5% excluding one-time PLI benefits), suggesting the company has successfully managed cost pressures through pricing or efficiency. (5 easing)
“Operating EBITDA for the year improved by 120 bps at 12.3% over the last year... The Company’s Operating EBITDA margin is at 14.0% in Q4. Excluding the PLI benefit of previous quarters, Q4 EBITDA margin would be at 12.5% as against 11.3% during Q4 of last year.”
STABLE. While overall motorcycle sales grew 10%, they were outperformed by scooters (up 21% for the year and 27% in Q4), indicating that the demand shift toward scooters and premium segments continues. (3 stable, 1 intensifying, 1 easing)
“Motorcycle sales for the quarter ended March 2025 grew by 10%... Scooter sales for the quarter ended March 2025 grew by 27%.”
EASING: While still a factor, management reports being gross margin positive on both 2W and 3W EVs even as they work through PLI eligibility for the full portfolio. (1 easing, 4 stable)
“I already said we are positive on gross margin. In any business, when you start first is to make sure that the gross margin is positive. That both in the two-wheeler and three-wheeler, we are positive.”
EASING. EV sales grew by 44% for the full year and 54% in Q4, reaching 2.79 lakh units annually. This high growth rate suggests that previous supply chain bottlenecks for critical components have been largely resolved. (2 easing)
“Electric vehicles grew by 44% registering sales of 2.79 Lakh units in the year 2024-25 as against 1.94 Lakh units during 2023-24.”
See the full cited Risk analysis of TVS Motor Co.
TVS Motor Co. analysis by filing period
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