Earnings Call Transcript Analysis Report #
TVS Motor Company Q3 FY25 Earnings Call Analysis #
Financial Performance #
Key Metrics:
- Operating Revenue (Q3 FY25): INR 9,097 crores (+10% YoY from INR 8,245 crores).
- Operating EBITDA (Q3 FY25): INR 1,081 crores (+17% YoY from INR 924 crores).
- Operating EBITDA Margin (Q3 FY25): 11.9% (+70 bps YoY from 11.2%, +20 bps QoQ). Management highlighted this as the “highest ever operating EBITDA margin” and noted it was achieved “without recognizing PLI benefits.”
- Operating PBT (Q3 FY25): INR 859 crores (+22% YoY from INR 702 crores).
- PAT (Q3 FY25): INR 618 crores (+4% YoY from INR 593 crores).
- 9M FY25 Operating Revenue: INR 26,701 crores (+13% YoY).
- 9M FY25 PBT: INR 2,517 crores (+19% YoY).
- 9M FY25 PAT: INR 1,858 crores (+16% YoY).
- TVS Credit (Q3 FY25): Book size INR 27,190 crores (+7% YoY), PBT INR 321 crores (+40% YoY, +48% QoQ).
- Export Revenue (Q3 FY25): ~INR 2,018 crores.
- Spare Parts Revenue (Q3 FY25): ~INR 950 crores.
- EV Revenue (Q3 FY25): ~INR 800 crores.
- USD Realization (Q3 FY25): INR 84 / USD.
- Capex (Q3 FY25): INR 340 crores. Expected FY25 Capex: ~INR 1,300 crores.
Comparisons:
- Strong YoY growth in Revenue, EBITDA, and PBT. PAT growth was lower (+4%) likely due to factors outside operating performance (e.g., subsidiary performance, tax).
- Sequential margin improvement continued (+20 bps).
- TVS Credit showed robust PBT growth despite moderating AUM growth (+7% YoY).
- Gross margin remained stable QoQ despite higher EV mix, attributed to product mix, cost reduction, and flat commodity prices.
Guidance/Forecasts: No specific numerical guidance revised, but management expressed strong confidence for Q4 and FY25/FY26. Expectation to continue growing ahead of the industry and improving EBITDA margins. PLI benefits for the full year expected to be recognized in Q4 FY25.
Growth/Decline Areas:
- Growth: Domestic 2W ICE (+5% vs industry +1%), International 2W (+26%), EV 2W (+57% units), Overall Revenue, EBITDA. Rural market growth (~10% in 9M) slightly outpacing urban. LatAm performing well.
- Decline/Challenges: Acknowledged pressure in “economy category and the moped category.” European e-bike market experiencing downturn. TVS Credit AUM growth moderated (management cited caution in unsecured/risky lending).
Strategic Initiatives & Business Updates #
Major Announcements:
- Launch of TVS King EV MAX electric three-wheeler with 179km range and fast charging.
- Introduction of new iQube variants with 2.2 kWh, 3.4 kWh, and 5.1 kWh battery options.
- Partnership with Hyundai unveiled for micro-mobility concepts.
- Entry into the Morocco market.
New Products/Services/Markets:
- New Jupiter 110 performing well.
- HLX 125 5-gear launched in key African markets.
- Focus on LatAm expansion.
- Showcased concept models at Bharat Mobility Expo (CNG scooter, 300cc bike) - positioned as capability showcases, market launch timing undecided.
Operational Changes:
- Continued investment in R&D, software, and digital capabilities (added ~500 people).
- Setting up a new hub in Dubai for international business (Africa, Middle East, Europe).
- Made DriveX (used vehicle platform) a subsidiary via further investment, citing synergies.
- Planned merger of Sundaram Auto Components (100% owned plastic business subsidiary) after selling its business – essentially transferring cash and land assets to TVS Motor.
Ongoing/Completed Projects:
- Norton: Product development ongoing, first products expected by end of CY25 or early FY26. Investments supporting readiness.
- E-Bikes (Europe): Focusing on cost reduction, working capital, and design competitiveness amid industry downturn.
- PLI Scheme: Audit process in “advanced stage,” expect recognition in Q4 FY25.
Market & Competitive Landscape #
- Industry Trends:
- Overall 2W industry growth (VAHAN) +9% in 9M FY25.
- Rural market recovery noted, slightly outpacing urban growth.
- Scooter segment expanding (ICE + EV share approaching 40%).
- EV 2W penetration at 5.8% (9M FY25)