Beat and Raise; Street Estimates too Low

Research evidence excerpt

Beat and Raise; Street Estimates too Low

tSet, Jefferies

Rising franchise: TVS's domestic 2W market share has risen to a 23-year high of 20% in

1QFY27, despite adverse demand shift away from mopeds. Over FY15-1QFY27, TVS has Exhibit 1 - Strong growth in 1Q'27

almost doubled its market share in both motorcycles (6.2% to 11.0%) and ICE scooters (15% TVS: 1QFY27 YoY growth (%) 41 40

to 29%), and has also garnered 25% share in E2Ws. TVS's volume share in 2W exports has also 38

doubled, from 13% in FY15 to 27% in 1QFY27 (FY26: 28%). 28

Peak of margin concerns behind: TVS's EBITDA margin has improved from an average of

6.4% in FY10-17 to 13% in FY26-1QFY27. After a sharp 350bp commodity cost headwind in

1Q, TVS expects just ~50bp incremental pressure in 2Q. It has taken ~50bp price hike and INR .Source:VolumeCompany data,RevenueJefferies EBITDA Recurring PAT

depreciation provides a tailwind too. We believe TVS has capability to expand EBITDA margins

2 - TVS market share at multi-year highin coming years given strong growth and improving franchise; we assume 13-14% over for Exhibit

Export 2Ws Wholesale market shares (%) 70 2Ws:

Domestic 2WsFY27-29E. 60

20Y high

High investment intensity: TVS invested Rs8bn in subsidiaries in 1QFY27 and plans to 4030 1QFY27

invest ~Rs20bn in FY27 (FY26: Rs26bn). Continued high investments with limited visibility of 20 20Y low

improvement in subsidiary profitability is a concern, and success of new Norton bikes would 100

Enfieldbe crucial. Capex has also risen with plans to spend Rs35bn in FY27 for products and 1.5mn . Bajaj Hero Honda TVS Royal Bajaj Honda Hero TVS

Source: CMIE, Jefferies

(22%) capacity expansion.

Retain Buy: We raise FY27-29 EPS by 4-5%; we are 7-21% above Street. We expect strong 13%

volume and 24% EPS CAGR over FY26-29E.