TVS Motors, the second largest two-wheeler manufacturer India in terms of revenue delivered stellar December Quarter 2023 results. TVS Motors ticked all the right boxes impressing investors with double-digit volume growth, robust revenue base, highest operating margins ever and highest net profit YoY growth over the past five quarters. In March 2020, TVS Motors stock price touched Rs 250 levels. From then on, a robust volume growth, well planned product portfolio catering to both rural and urban customers and rising electric scooter market share has multiplied its stock price 12x since 2020.
Robust December Quarter 2023 results
TVS Motors stock price is near its 52-week high. The company reported revenues of Rs 10,114 crore in Q3FY24, up 25% YoY aided by 27% YoY volume growth.
Two-wheeler sales in Q3FY24 stood at 10.63 lakh units compared to 8.36 lakh units corresponding quarter previous year. Domestic sales which constitute nearly 75% of total sales grew 33% YoY, almost eight lakh units in December Quarter 2023. Exports grew by 4% at 2.16 lakh units in Q3FY24 against last year’s 2.07 lakhs, same period previous year.
Operating margins came in at 14.71% in Q3FY24, expanding two percentage points YoY supported by lower raw material costs. Raw material costs as a percentage of revenue declined from 74.6% in Q3FY23 to 69% in Q3FY24.
Net profit stood at Rs 478 crore in December Quarter 2023 against Rs 300 crore, corresponding quarter previous year, up 59% YoY.
Electric motorcycle and threewheeler in the works
While the domestic market is a major growth catalyst for TVS Motor Company, the street is gung-ho about the future growth of its electric product portfolio. The stock price moved up rapidly for the past three years as the street expects a THRILLECTRIC ride with TVS Motors. The company is the second largest player in the electric scooter segment with the market share of nearly 21% in India. Electric scooter monthly sales in India are around 75,000 units and TVS Motors sold 16,000 units per month in Q3FY24. TVS Motors electric scooter market share is higher than its ICE two-wheeler market share which is around 17% as per Federation of Automobile Dealers Associations (FADA) January monthly report.
The company plans to launch a series of products in the range of 5 to 25 kilowatts in the next one year for TVS iQube. Speaking on iQube, K N Radhakrishnan, Director and Chief Executive officer at TVS Motor Company said, “Currently, we have over 400 iQube dealers. We will double it by the end of the quarter.” In November 2023, the company launched a premium electric scooter, TVS X priced at Rs 2.49 lakh. Defining TVS X as a global product, Radhakrishnan, said, “TVS X will definitely redefine the way we look at EV globally. This is designed, developed and made in India. TVS X will lead the way to become a global benchmark for a machine that is born electric…it is THRILLECTRIC.” The company also announced the start of production of BMW CE-02 which is jointly designed and developed by TVS Motors along with BMW Motorrad. The jointly developed electric motorcycle will be launched April-May this year. TVS Motor Company associate Company, Ultraviolette, manufacturer of high-performance electric motorcycles is also expected to launch its e-motorcycle in the near future. And last but not least, an electric three-wheeler is in the works.
TVS Motors unfolds its global ambitions with acquisitions in Europe
Electric segment currently constitutes 4% of the total two-wheeler volumes of TVS Motors in Q3FY24. The company started its electric journey with the launch of TVS iQube in January 2020. With a vision to become a global brand and enter the UK, Europe and the US, TVS Motors started its carefully crafted acquisition spree. In April 2020, the Norton Motorcycles was acquired by TVS Motors with an aim for developing electric motorcycles. Later the company invested in Bengaluru-based electric vehicle startup Ultraviolette Automotive in September 2020. Focussed on expanding its presence in the e-mobility space in Europe, EGO Movement, a Switzerland based, e-bike manufacturer in September 2021 was acquired. After Norton and EGO Movement, expansion in Europe continued by acquiring Switzerland based SEMG group, an e-bike retailer operating both in Germany and Switzerland. And then comes the component manufacturer, German startup Killwatt GmbH with a 25% stake investment in April 2023. The company manufactures components for electric two-wheelers and three-wheelers. The company added another feather in its cap by partnering with Emil Frey Group, a Zurich-based automobile retailer in November 2023. In December Quarter 2023, TVS Motors invested Rs 300 crore in Norton, SEMG and Killwatt. Speaking on overall capex, Radhakrishnan said “I think last time we highlighted that capex is around Rs 1,000 crore, predominantly on EV. This includes all the products in EV and the product pipeline, what we are looking at.”
TVS iQube exported, Europe the is new export destination
TVS Motors has developed its own electric ecosystem over the past four years. The company has its own electric scooter lineup and electric motorcycles will be added in the near future. Two-wheeler retailers, SEMG, EGO Movement and Emil Frey will be utilized to sell TVS Motors EV products in Europe. TVS Motors has started exporting iQube in Q3FY24 and expects its electric segment to replicate its success overseas too. According to the recent agreement with Emil Frey, TVS Jupiter 125, TVS NTORQ, TVS Raider, TVS Ronin, TVS Apache RR 310, TVS Apache RTR 310 and TVS iQube and TVS X will be made available in Europe. Though Africa is the largest export market for TVS Motors, followed by LATAM countries, high inflation and currency depreciation is a major challenge. In the present scenario, exports are also impacted by Red Sea crises which has led to higher freight charges and unavailability of containers. While the Middle East and South East Asian region is growing positively for TVS Motors, Europe as an export destination will provide both revenue growth and geographic diversification in the present uncertain times.
