On Wednesday, CLSA revised its price target for TVS Motor Co Ltd (TVSL:IN) shares to INR 2,511, down from the previous INR 2,730, while retaining a Hold rating on the stock. Basudeb Banerjee, a CLSA analyst, noted that although TVS Motor's revenue met the firm's estimates, its Ebitda surpassed expectations at 11.9%, compared to CLSA's forecast of 11.4%. This was attributed to lower-than-anticipated other expenses.
Despite a quarter-over-quarter volume decline of 1.3%, TVS Motor managed to expand its Ebitda margin by 20 basis points, thanks to cost optimization efforts. The company's gross margin remained consistent with the previous quarter as commodity prices and product mix saw no significant change.
TVS Motor has notably advanced to the second position in the electric two-wheeler (e-2W) market as of December 2024, capturing approximately 23% market share. However, its volume in this segment did not show growth compared to the previous quarter. In light of the increasing competition in the e-2W market and its potential impact on margins, CLSA has reduced its revenue forecast for TVS Motor by 4.4% for the fiscal year 2026 and trimmed the Ebitda margin prediction by 100 basis points.
Consequently, CLSA has also adjusted its earnings per share (EPS) estimates for the fiscal years 2026 and 2027, decreasing them by 14% and 19%, respectively. The new discounted cash flow (DCF)-based target price represents 27 times the projected earnings for fiscal year 2027, as per CLSA's valuation model. Despite the adjustments, the firm maintains its Hold rating on TVS Motor stock.
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