tvs motor share price: TVS Motor shares hit 52-week high on Q2 earnings. Should you buy?

The brokerage remains optimistic about the company’s growth prospects in light of improving 2W demand in the country.

Domestic brokerage Nuvam also raised its target price as it retained a buy view on the counter vouching for its growing market share and EV focus.

However, Kotak Institutional Equities remains skeptical about the growth trajectory of TVS amid growing competitive intensity and expensive valuations.

Shares of TVS Motor company were trading in the green around 9:30 am and jumped 1.5% to hit their 52-week high of Rs 1,634 on the NSE.

TVS Motor Company on Monday reported a 32% year-on-year (YoY) increase in net profit for the quarter ended September 2023 to Rs 536.50 crore. Revenue from operations increased by nearly 13% on year to Rs 8,145 crore. The net profit was higher than an ET Now poll of Rs 512 crore, while the revenue was largely on expected lines.The two-wheeler maker’s operating profit, calculated as earnings before interest, taxes, depreciation, and amortisation (EBITDA), grew by 22% on year to Rs 900 crore. The EBITDA margin for the quarter was 11%, compared to 10.2% a year ago.Here is what brokerages recommended:

Jefferies Buy | Target: Rs 2,000Jefferies has a buy view on the TVS Motor Company stock and the brokerage hiked the price target to Rs 2,000 from Rs 1,750.

Commenting on its Q2 earnings, Jefferies called it a new high of quarterly performance. The brokerage also noted that India’s 2W demand is recovering and the company is exhibiting improvement on the exports front too. While the margins are improving, investments remain high, it added.

Nuvama: Buy | Target: Rs 1,840Nuvama has retained a buy on the counter and increased the September price target to Rs 1,840 based on 30X EPS from March 2024 target of Rs 1,510, based on 28X EPS).

“We upgrade the multiple on strong growth prospects, owing to the early stage of the 2W upcycle, market share gains and aggressive EV focus,” the brokerage noted.

In Q2FY24, TVSL posted revenue/EBITDA growth in line with estimates by Nuvama. The brokerage noted that the company has been gaining domestic market share and expects a further increase from 16% in FY23 to 18% in FY26E, led by increased share in executive/premium bikes and EVs.

Kotak Equities: Sell | Target: Rs 1,000Kotak has retained a sell view on TVS Motor with a price target of Rs 1,000. In its post earnings stock review, the brokerage said that the two-wheeler maker’s 2QFY24 EBITDA was 1% below its estimates. Moreover, the losses in subsidiaries further increased in 2QFY24, which needs to be monitored.

Valuations remain expensive despite building in recovery in exports and company’s leadership in EV 2W and steady uptick in motorcycle segment >125 cc.

Decline in domestic ICE scooter mix and increasing competitive intensity in EV segment will weigh on profitability, it said in the note.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)