Motilal Oswal's research report on TVS Motor Company
TVSL’s operating performance was above our estimate, driven by lower RM cost. However, higher interest and tax led to an inline PAT. The management’s focus remains on expanding its EV capacity, portfolio, and reach. It is also scouting for an investor in its NBFC business, which can unlock value. - We raise our FY23 EPS estimate by 13% to reflect the increase in prices and some recovery in domestic demand. We maintain our FY24 estimate. We maintain our Neutral rating, with a TP of INR630/share, as valuations fairly capture the expected strength in earnings growth and the risk of an EV disruption to its Scooter business.
Outlook
Valuations at 24.2x/19.7x FY23E/FY24E EPS largely reflect its strong earnings growth as well as increasing risk of EVs. We maintain our Neutral rating with a TP of ~INR650 (premised on ~18x Jun'24E EPS and INR38/share for the NBFC).
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