Release Date: January 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TVS Motor Co Ltd (BOM:532343, Financial) achieved its highest ever operating EBITDA margin of 11.9%, indicating strong operational efficiency.
- The company's two-wheeler domestic ICE sales grew by 5%, outperforming the industry growth of 1%.
- EV two-wheeler sales increased by 57% in Q3, showcasing significant growth in the electric vehicle segment.
- TVS Credit added more than 3 million new customers this financial year, reflecting robust growth in its financial services arm.
- The company has introduced new products like the TVS King EV Max, which combines advanced electric propulsion with superior comfort and connectivity, enhancing its product portfolio.
Negative Points
- Employee costs and other expenditures grew by over 25%, outpacing revenue growth of 13%, indicating potential pressure on operating leverage.
- The company is cautious about credit to risky customers and unsecured lending, which may impact growth in TVS Credit's AUM.
- There is a slowdown in the AUM growth of TVS Credit, which has decreased to 7% from over 20% in previous quarters.
- The company is facing challenges in the entry-level motorcycle and moped categories due to pressures on buying power.
- Investments in subsidiaries like Norton and e-bikes are ongoing, with significant funds allocated, which may impact short-term profitability.
Q & A Highlights
Q: Can you provide insights on the impact of the upcoming OBD 2B norms and any expected price hikes?
A: We are preparing for the OBD 2B norms effective April 1, 2025. Some products will launch soon, and we'll announce any cost and price increases at the appropriate time. The price hikes are expected to be competitive and not as significant as previous transitions like BS IV to BS VI.
Q: Despite an increase in electric two-wheeler sales, gross margins remained stable. What factors contributed to this stability?
A: Our gross margin stability is due to a steady product mix, material cost reductions, and minimal price increases. Commodity costs remained flat, and our focus on cost management and product mix has been beneficial.
Q: What is the outlook for TVS's export market, and how is the iQube network expansion progressing?
A: We are already present in Brazil and expanding in Latin America. Our focus is on understanding consumers and building the brand. For iQube, we have about 900 dealerships in India, with plans to expand further.
Q: Can you explain the rationale behind the recent investments in international businesses and the slowdown in TVS Credit's AUM growth?
A: We regularly assess the fair value of our investments. The INR41 crore write-off relates to TVS supply chain investments. TVS Credit's AUM growth appears slower due to tightened credit norms, but the portfolio remains healthy.
Q: What are the future plans for Norton and the expected timeline for product launches?
A: Norton products are expected to be ready by the end of this year, with more launches in the next financial year. We aim to offer a range of Norton motorcycles globally, with sustained investments in product development.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
