TVS Motor Shares Jump 5% After Q3 Earnings And These 2 Analysts See More Upside

Brokerage firms HDFC Securities and ICICI Securities remain highly positive as Chennai-based TVS Motor Company Ltd posted a 22% year-over-year surge in profits at around ₹353 crore.

The TVS Motors Analysts: Basudeb Banerjee at ICICI Securities and analysts at HDFC Securities led by Aniket Mhatre both maintained their "buy" rating. HDFC stuck with its previous target price of ₹1275, however, ICICI Securities revised its target price to ₹1,251 from ₹1,284.

The TVS Motors Thesis: The company's third-quarter results largely met the brokerage firms’ expectations. In its latest report, HDFC Securities said that the motorcycle manufacturer’s third-quarter revenue growth exceeded expectations on the back of price hikes.

ICICI Securities also attributed the revenue growth in part to the increase in average selling price (ASP), which was made possible by price hikes and favourable currency movements in its export markets.

The firms observed that the company's EBTIDA margin could be better. HDFC Securities reported that this quarter's EBTIDA margin of around 10.1% failed to meet its expected margin of 10.5%, as gains made in ASP were somewhat softened by lower volume in sales. The company saw a 14% quarter-over-quarter dip in vehicle sales. I

CICI Securities said that the company's EBTIDA was in line with its projections but expects it to expand to 11.5% in the next fiscal year from the current levels.

Analysts observed that the company's electric vehicle division looks promising and is a strong upside for the Chennai-based company going forward.

ICICI Securities noted that with the company expanding its EV network to 200 outlets and coming out with new electric vehicles, it "is looking forward to making the EV portfolio EBITDA-breakeven soon."

HDFC also sees the company ahead of its listed competitors in the EV space because of the "strong product pipeline in place for the next 24 months."

Price Action: TVS Motors has been riding the positive sentiment at the bourses as it jumped over 5.5% to reach Wednesday's intraday high of ₹1037.85 in the late hours of trading.