TVS Motor’s new launches and EV leadership support margin-led growth

Investment View and Recommendation

Motilal Oswal Financial Services retained its Buy recommendation on TVS Motor Company in its July 21, 2026 results update following strong Q1 FY27 operating performance. The broker believes that continued market-share gains in domestic and export markets, an expanding electric-vehicle presence, premiumisation and a strong new-product pipeline can sustain outperformance and support TVS Motor’s premium valuation.

The broker’s target price is Rs 4,470, based on 35 times FY28E EPS, compared with the CMP of Rs 3,792. Following the Q1 FY27 margin beat, Motilal Oswal raised its FY27E and FY28E EPS estimates by 8 per cent and 5 per cent, respectively.

Q1 FY27 Operating and Financial Performance

TVS Motor reported its highest-ever quarterly sales volume of 16.3 lakh units in Q1 FY27, up 27.7 per cent year on year. Motorcycle volumes increased 19 per cent, scooter volumes rose 36 per cent and three-wheeler volumes grew 48 per cent. Electric-vehicle sales increased around 86 per cent year on year to approximately 1.3 lakh units.

Commodity-cost inflation of around 3.5 per cent affected gross margin, which declined 160 basis points year on year to 37.2 per cent and was 80 basis points below the broker’s expectation. However, EBITDA margin of 12.8 per cent was ahead of Motilal Oswal’s 12.2 per cent estimate, aided by a better product mix, favourable currency benefits and tight cost control. EBITDA rose 41 per cent year on year to approximately Rs 1,780 crore, 8 per cent ahead of the broker’s estimate.

Reported PAT rose 32 per cent year on year to approximately Rs 1,020 crore and was in line with estimates. Lower other income excluding fair-value gains, higher depreciation and a higher tax rate offset the operating beat. Other income included approximately Rs 150 crore of fair-value gains on investments.

Management Outlook and Near-Term Drivers

Management expects double-digit domestic two-wheeler industry growth in Q2 FY27, although it flagged uncertainty over monsoon progression and food inflation. It expects exports to sustain or improve their current growth rates, supported by capacity additions, a broader product portfolio and strength in Africa, Asia and Latin America.

• Management expects robust electric-vehicle growth and rising industry EV penetration as adoption broadens.
• Dealer inventory remains tightly managed at 25 to 30 days.
• TVS Motor took a 1.5 per cent price increase in Q1 FY27 and was considering a further 0.5 per cent increase in Q2 FY27 to address cost pressures.

Market-Share Gains and Product Pipeline

The broker highlights TVS Motor’s market-share progress across categories. Domestic motorcycle share reached around 11 per cent in FY26 from 7.5 per cent in FY19, while premium 150-250cc share reached 28.8 per cent. ICE scooter share reached 27.5 per cent, and TVS Motor led electric scooters with a 33.8 per cent share.

Key products include Raider in 125cc motorcycles, Apache in 150-250cc motorcycles, Jupiter and Ntorq scooters, and iQube electric scooters. Recent launches, including the Ntorq 150cc, Orbiter, an upgraded Raider and a cargo three-wheeler EV, are expected by the broker to extend market-share gains.

Capacity Expansion and Financial Outlook

TVS Motor plans to invest about Rs 3,500 crore in new products and capacity expansion. Annual two-wheeler capacity is planned to increase from 68 lakh to 83 lakh units, while three-wheeler capacity is expected to rise from 2.5 lakh to 4.2 lakh units by the end of FY27.

Motilal Oswal expects revenue, EBITDA and PAT CAGR of 20 per cent, 23 per cent and 24 per cent, respectively, over FY26-28E, with EBITDA margin improving to 13.5 per cent in FY28E. The broker’s outlook is supported by domestic and export volume growth, continued EV expansion, premiumisation, new products and operating leverage.

Valuation Basis

Motilal Oswal’s Rs 4,470 target price is based on 35 times FY28E EPS. The broker retained its Buy recommendation after the Q1 FY27 performance and believes that TVS Motor’s market-share gains, EV leadership, premiumisation and product pipeline support its premium valuation.