Strong volumes, rising margins and an improving EV supply chain makes the ride smooth
TVS Motor’s latest quarterly numbers will please almost everyone: customers, dealers, and analysts. And investors too.
That’s the lens through which to read the BOBCAPS assessment: an “overall healthy show” with “valuations at par,” leading it to “maintain HOLD,” even after revising its target price higher. In other words, TVS has done enough to sustain the story, but not enough to make the valuation look obviously cheap.
Volume growth
The most visible strength is demand. BOBCAPS highlights “volume gains strong at 27% YoY,” calling it the “key driver for revenue,” which grew around 29% year-on-year to roughly Rs125 billion. This wasn’t narrow growth driven by one lucky segment. The quarter had breadth: motorcycles grew 31% year-on-year, scooters rose 25%, exports increased 35%, and three-wheelers more than doubled, up 106%. That mix matters because a company can sometimes buy growth through discounts in one segment; doing it across the portfolio suggests healthier momentum.
Emkay Global’s take is similar, describing TVSL’s Q3 performance as “strong,” with revenue up 37% year-on-year and volumes up 27% to about 1.54 million units. It also notes management confidence that industry momentum will sustain into the fourth quarter, guided at around 15% growth, with support from GST-led affordability and rural recovery. TVS is effectively saying the demand runway is not narrowing — it may be opening.
Realisations rising without aggressive pricing
What makes the topline even more credible is that TVS hasn’t relied on heavy price hikes to deliver it. BOBCAPS notes net realisation per vehicle rose about 8% year-on-year and 2% quarter-on-quarter, helped by “continued premiumisation, a richer product mix and strong export contribution driving ASPs upwards.” Price hikes were modest, around 0.3% in the quarter.
That is the kind of revenue quality markets like: more units plus better mix, rather than a growth headline inflated by price action alone.
Margin expansion good
The other key signal is profitability. BOBCAPS says raw material inflation was moderate and “offset by realisations gain,” keeping gross margin at around 29%, nearly flat year-on-year and quarter-on-quarter. Raw material cost stayed stable at roughly Rs84 billion, or 71.2% of sales.
Despite flat gross margin, operating leverage showed up below the line. BOBCAPS reports operating EBITDA surged 51% year-on-year to about Rs16.3 billion, and the EBITDA margin expanded to 13.1%, up 120 basis points year-on-year and 40 basis points quarter-on-quarter. Emkay makes the same point more dramatically, calling it an “all-time high EBITDAM” of around 13.1%, which management expects to sustain through scale benefits, premiumisation and cost initiatives.
EV progress is real
Electric vehicles remain the headline-grabber. BOBCAPS notes EV two-wheeler sales grew 40% year-on-year, “beating the earlier magnet supply constraints.” It says the scooter segment share is now around 40%, supported by Orbiter ramp-up and NTORQ strength, while e3W momentum remains strong with L5 share improving.
Emkay reinforces the supply chain angle, noting magnet availability is recovering and full supplies are expected within a month. It also highlights strong response to the company’s EV products and TVS’s push toward EBITDA breakeven in the EV portfolio, helped by PLI benefits.
BOBCAPS revises earnings upwards and lifts its target price to Rs3,562 from Rs3,348, but retains HOLD, valuing the core business at 33 times and adding Rs133 per share for TVS Credit Services. It calls the valuation “at par.”
Emkay is much more constructive, retaining TVS as a top pick and raising its SOTP-based target to Rs4,500 from Rs4,200, rolling forward to 35 times December-27 earnings and valuing TVS Credit at around 2 times book.
At the current price of Rs3,728, BOBCAPS’ own table implies TVS trades at roughly 48 times FY26 earnings and 41 times FY27. That’s a premium multiple that assumes the company will keep delivering strong volume, maintain margin momentum, and scale EVs without letting competition or costs bite.
