TVS MOTOR (-) : Elevated capital allocation concerns

Research evidence excerpt

TVS MOTOR (-) : Elevated capital allocation concerns

EQUITIES

AUTOMOTIVE

TVS MOTOR UNDERPERFORMPRICE* INR3,291  TARGET PRICE INR2,280 (DOWNSIDE 31%)

FLASH NOTE

Elevated capital allocation concerns

19 MAY 2026 Securities Research Report Production time: 03:52* (London time)

Research Analyst & Publishing Entities

Kumar Rakesh BNP Paribas Securities India Private Limited (+91) 22 6196 4350 kumar.rakesh@asia.bnpparibas.com

What happened? Synergy missing in the proposed investment

TVS Motor Company announced it will be acquiring 4.9% stake in Jana Small Finance bank with an investment of

cINR1.9b. The company views this investment as “to provide better insights into the banking ecosystem and allow for

mutual collaboration in various areas for the long term”. TVS Motor had earlier announced an investment of cINR25b

in its subsidiary with a large part of it allocated to Norton Motorcycles. In FY26, the company reported a standalone

FCF of only cINR11.8b (including investment expenditures) despite healthy standalone operations. Additionally, its

losses widened in its subsidiary, increasing from cINR2.3b in FY25 to cINR4.4b in FY26.

BNPP View:

We have been cautious about TVS Motor Company’s capital allocation, with its subsidiary continuing to report losses

consistently. The strategic rationale appears to be missing given the lack of meaningful operating synergies between

the two companies. Its recent proposed investment in the Jana Small Finance bank further raises our concern around

its capital allocation strategy, given its weak FCF for the last two years and going by its capex targets for FY27, it is

unlikely to make a meaningful FCF in FY27 as well. We see several investments made by the company not generating

desired profits and having write-off risks.