TVS Motor shares hit record high post Q4 earnings; what should investors do?

Shares of TVS Motor Company Ltd hit their all-time high today after the two wheeler maker reported a 49% rise in March quarter profit. TVS Motor stock touched a record high of Rs 1235, rising 5.57% against the previous close of Rs 1169.85 on BSE. Total 1.73 lakh shares of the firm changed hands amounting to a turnover of Rs 21.04 crore. Market cap of the auto major stood at Rs 57,711 crore.  The stock has zoomed 92.63% in a year and risen 11.75% this year.   

In terms of technicals, the relative strength index (RSI) of TVS Motor stock stands at 63.8, signaling it's neither trading in the overbought nor in the oversold territory. The stock has a beta of 0.8, indicating high volatility in a year. TVS Motor shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

Net profit rose to Rs 410.27 crore for the quarter ended March 2023 against a net profit of Rs 274.50 crore in the year ago period. Consolidated revenue from operations climbed 19.4 per cent to Rs 6,604.78 crore in Q4 against Rs 5,530.31 crore in the year ago period. 

Earnings before interest, taxes, depreciation and amortization (Ebitda) in the March quarter came in higher at 10.3 per cent.  Operating EBITDA stood at Rs 680 crore in the fourth quarter with a growth of 22 per cent as against Rs 557 crore in the corresponding quarter last fiscal. 

Revenue from operations climbed 27 per cent to Rs 26,378 crore in the last fiscal against Rs. 20,791 crore recorded in FY21-22. Profit for the year ended March 2023 stood at Rs 1,491 crore compared to Rs 894 crore in the year ended March 2022. 

Here’s a look at what should investors do post Q4 earnings  

Prabhudas Lilladher has assigned a buy call with a target price of Rs 1,300.   

"We believe TVS will likely be able to grow ahead of the industry led by (1) new product launches in ICE & EV segments (2) higher focus on exports & premiumisation and (3) margin improvement helped by cost reduction efforts, operating leverage and price hikes which could more than offset negative impact from higher EV mix. Maintain ‘BUY’ with an unchanged target price of Rs 1,300 at 26x Mar-25E EPS including Rs 34 for TVS credit," said the brokerage. 

HDFC Securities has revised its target price upward for the TVS Motor stock to Rs 1342. "TVS has now emerged as the second-largest player and sold 97k units of iQube in FY23. With supply challenges now largely over, we expect TVS’ outperformance to continue on the back of the ramp-up of its launches, including the new Ronin and Raider. Even in EVs, it seems to be ahead of its listed peers with a strong product pipeline in place for the next 24 months; it has signed up with industry experts and JV partners to emerge as a leading player in EVs. We maintain BUY with a revised TP of Rs 1,342/sh (earlier INR 1275), as we roll forward to FY25 EPS (target multiple unchanged at 28x)," said the brokerage.  

 

YES Securities said, "EBITDA margins are considered resilient given weak volume trajectory further aided by upfronting of cost on EVs/digital/connected technologies. TVSL currently trades at 23.5x of FY25 EPS (v/s HMCL/ BJAUT of 12/16.5x). We believe, it should continue to trade at a premium as we expect EPS CAGR of ~26% over FY23-25E. We believe sustained market share gains in domestic EV 2Ws led by aggressive product pipeline, scope of external investments in to EV vertical and NBFC TVS credit are additional re-rating triggers. We re-iterate TVS as our preferred pick among 2Ws with ADD and revised TP of Rs 1,311 (v/s Rs 1,272) and continue to value co at 25x Mar-25 EPS plus Rs 68 value to TVS credit. We tweak FY24/25 EPS by -1.4%/+2.6% to reflect product mix changes." 

 

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