TVS MOTOR (-) : High FCF burn, cash to remain elusive in FY27 as well

Research evidence excerpt

TVS MOTOR (-) : High FCF burn, cash to remain elusive in FY27 as well

EQUITIES

AUTOMOTIVE

TVS MOTOR UNDERPERFORMPRICE* INR3,527  TARGET PRICE INR2,280 (DOWNSIDE 35%) TARGETnon materialPRICE EPS 03/27e-1% EPS 03/28e-1%

High FCF burn, cash to remain elusive in FY27 as well

TVSL was one of our positive margin surprise candidate vs consensus, and it delivered owing to14 MAY 2026

Securities Research Report higher dollar realisations and PLI benefits. In FY26, TVSL saw its subsidiary losses widen and

Production time: 03:28* (London time)

significant FCF outflow. Going by its accelerated capex and investment outlook, it is unlikely to

Research Analysts & Publishing Entities

make any meaningful FCF in FY27 and will remain levered. TVSL remains an equity story hinged

Kumar Rakesh on its strong operating performance while its financial performance is sub-par. Coupled with capitalBNP Paribas Securities India Private

Limited allocation issues and questionable investment strategies, its 38x (BNPPe: 43x) NTM P/E valuation

(+91) 22 6196 4350 looks lofty to us. Maintain Underperform.

kumar.rakesh@asia.bnpparibas.com

What did we learn from the quarter? – In-line quarter, subsidiary losses widen

TVSL’s 4QFY26 revenue was slightly higher than BBG consensus and our estimates, driven by PLI

benefits and better dollar realisations. Gross margin contracted by c20bp q-q, impacted by

commodity cost headwinds which was offset by lower other expenses in proportion to sales q-q by

c30bp. EBITDA margin was higher than consensus expectation and in-line with our assumption.

PAT was slightly lower than BNPPe and BBGe owing to losses on other income. Its subsidiary

losses widened q-q/y-y, and the company saw an FCF outflow of INR12.8b in FY26.