TVS Motor Company Earnings Call for Q4FY26 & Full Year

Good evening everyone and thanks for joining us today. We are delighted to share that in financial year 2025-26, TVS Motor surpassed all previous highs and achieved record sales volume of 5.9 million units (24% growth), revenue of 47,270 crores (30% growth), and operating PBT of 4,975 crores (40% growth). Two-wheeler domestic sales grew 19% vs industry 10%, international sales grew 31% vs industry 23%, total two-wheeler sales grew 22% vs industry 12%. Three-wheeler sales grew 63% to 220,000 units. EBITDA margin improved 60 bps to 12.9%. Operating free cash flow grew 47% to 3,855 crores. In Q4, we achieved highest ever revenue of 12,888 crores (36% growth) and EBITDA at 13.1%. TVS Credit also had a record PBT of 1,248 crores with book size 30,631 crores. International business saw highest ever sales of 15.8 lakhs (33% growth). On new products, we launched Orbiter V1 with 1.88 kWh battery and Orbiter V2 with 3.1 kWh, and introduced B2B across EV portfolio. We also launched TVS King Cargo heavy duty CNG. Norton brand: we unveiled products in Milan and will soon launch new models. For FY26-27, we expect single-digit industry growth with good momentum in EV, scooters, and premium segments. We face headwinds from commodity inflation (3-5% impact on revenue) and supply chain challenges, but are taking price increases, improving product mix, and leveraging scale. We are investing in capacity expansion by 1.5 million units to reach 8.3 million. Demand remains strong both domestically and internationally. We are confident of growing ahead of the industry.

Yes please.

We are expecting a good single-digit growth for the industry this year. The demand situation is very good for us thanks to our product range. EV is doing extremely well with iQube and Orbiter. Jupiter 110 and 125 are doing extremely well in scooters. The premium and super premium categories like Apache, Ronin, and N250 are doing well. The challenge will be in the economy category but our proportion there is small. We are strong in scooters which will grow faster, and our scooter share is 38% likely to go over 40%. In international, demand is extremely good and momentum will continue, though we are watching geopolitical challenges and transit delays. We are confident of doing better than the industry.

The commodity inflation is unprecedented at around 3 to 5% impact on revenue. We were able to increase prices to offset about 35-50% of that. We are closely monitoring and will take appropriate price increases, along with cost reduction, product mix improvement, and scale benefits. It is a combination of strategies.

Revenue, revenue, revenue, yes.

It is about 0.9%.

We are immediately looking at increasing capacity by another 1.5 million to go to around 8.3 million. Work has started in Q4 last year. This financial year is very important. For FY28 and FY29 we are also thinking about further additions. We want to be ahead of industry growth and ensure capacity is not a constraint.

Supply chain challenges were unique in April and end of March due to geopolitical unrest, rising gas and energy costs affecting commodity availability and prices. We maintain only 21-30 days of dealer inventory, so any production delay affects retail. We are seeing labor challenges at tier-2 suppliers. We are supporting them. May is much better than April, and we expect to come out of it by end of this month. We are confident of growing ahead of the industry in Q1 both in retail and dispatches.

1122. Got it. Thank you.

We are confident about the demand. There is absolutely thanks to the customer delight. The products and the product range what we have delivered. We are very confident on the demand side. I'm talking about TVs. The uncertainty is on the raw material availability the timely availability. The costs are high but couple of days delay here and there is one worry. Another worry which we are getting over completely is the supply chain disruption that we are coming out of it fully. So I'm very confident by end of couple of weeks time we will be completely out of it and we are closely monitoring the overall situation in terms of what is happening on the geopolitical situation because this is not only for us it is for the entire industry. So we have to be very cautious about that. When I say cautious, we have to closely monitor what is happening how the segments are doing well. And please note that for a distributor also the material has to reach on time and if there is a 10-15% delay in terms of the extra lead time for transit. Again when you have high input costs, that is also we cannot lose any opportunity. So otherwise we are pretty confident. So maybe in two three weeks we will come out of it.

See the overall, let me tell you it is more for the overseas subsidiaries. We spend about investments of about 2,400 crores total I'm paying for the year and predominantly it is for Norton and Norton products are getting ready and many of the products are going to be seen in Q2 of this year and I'm pretty confident I've seen the product they're all extremely good and it is going to really redefine the super premium globally. About 200 crores is in DBS credit services and we also have put as a strategic investment in Dubai to have significant focus on international markets. We have established a total infrastructure and we have invested this as we said about couple of quarters back about 300 crores we have invested. All put together this quarter this year, that last financial year was 2,400 crores. Next year the investments will be much lower. It will be maybe another 500-600 crores lower than this 2,400 crores. We are very confident that many of the investments whatever we have made this year are going to start yielding better revenues and start getting results for us. Now coming to capex, our focus on the product development and new products will continue from TVS motorcycle that will be around like this year around close to 2,000 crores. Another additional investment is we are adding another one and a half million of capacity. So we are expanding in a significant way on all two wheeler and three-wheeler that will be about 1,000 crores plus. And we are also expanding our R&D because we believe in investing in R&D capability testing. So all put together the capex for next year for TVS Motor will be likely to be around 3,000 crores.

You're absolutely right. I think Asian market the response to IQ is very good. We are now starting our orbiter. So Asian markets have started a good proportion of our EVs. Currently we are doing about last year if you look at our average was about 30 to 32,000 per month. We have now moved maybe around 40,000 and we will soon move to 50,000 per month. So that is the kind of direction we are looking at in EV. We will definitely be ahead of the industry that I can promise you. We are constantly looking at our capacity versus demand and expansion in the network and also you have seen the variants in IQ and orbiter and we will go ahead of industry.

Thank you.

See these are things you have to constantly look at. But the strength is we have a very strong product range of HLX series 100, 125. Actually the demand is so high for us we are not able to meet the demand today. Country by country people are loving our products in African market and many other markets. So our endeavor is to significantly and proportionately increase. The challenge according to me what we are seeing is the delay in terms of container availability and making sure that there is 15% increase in the lead times now. And as you know, when the distributor plans, whatever money is put in and they have certain dealers and sub dealers, they need to have this plan and 15% is like another 10 days delay, 8 days delay or one week delay. So this is something we need to plan and we need to also support them in terms of possibly higher capacity, higher production, better planning. But the inflation, prices of energy, local challenges, we always constantly look at it because we are now talking about this war situation. But last year or year before that we have seen Ukraine-Russia war also created certain problems in this region. So this is something we have been very closely monitoring and I'm pretty confident that we will come over it. We will get over these challenges and come up with a very clear solution. What is more delighting is every market these products are sought after and we are very confident that that momentum is going to help us to grow faster than the industry.

TVS always believes in investing behind technology coming up with models which delight the customer. This has been our focus for our growth ahead of the industry and that momentum will continue. Last year you have seen IQ, you have seen RTX, you have seen orbiters, now V1 version and you have seen three-wheeler. We started with the passenger EV, then we started cargo, then CNG cargo. So we completely believe in investing behind product and our strength is R&D, software, digital, connected services. So this is something we will continuously invest and we will thrive. That's also the reason our capex is pretty high. Because we don't stop in investing. We always say that these are all medium to long-term strategy of the company to grow aspirationally in every market. On top of it, super premium models which we are investing, products are getting ready in our Hosur plant and Solapur. So we are very excited about FY2627. I think it is going to be a key turnaround year for the next phase of growth for TVS Motor.

Yes, yes sir. Solapur is looking at one model which is in the high end where we will be making there. The other models are going to be made here and we will also look at what type of models in Solapur, what type of models in India. But we are leveraging India especially the Hosur plant in a big way.

See, one is monsoons. As we open this year when we look at the reservoir water levels as of now it is 16% higher. So it is definitely good for the Kharif season. However, as we said, El Nino risk could moderate the rainfall. So we have to be constantly watching that and we have to make sure that the reservoir water levels are very critical going forward. That is very critical for looking at in my opinion Q3 and Q4 which we will very closely look at. What was your second question?

Normally I don't give any guidance on margin because we don't look at that. We take pricing as a strategy and I always believe that pricing is only one element. We always look at the value what we are giving to the customer in terms of TCO, attractiveness, technology, connectivity. So pricing is only one element and we always use variant strategies. There are different types of customers. So we continue to leverage these methods and when you grow the top line ahead of the industry, that also gives you many benefits. In terms of cost inflation, this 3 to 5% is quite significant. So we have to closely monitor and we constantly look at what type of opportunity is given to us in terms of looking at variances, what kind of pricing we can look at. It is a continuous journey. Our endeavor is to grow the top line and continue the momentum. We don't look for one quarter or another quarter. Many times we become very anxious about what happens in Q1, Q2. We always look at a trajectory. When we started the growth momentum, we were at 6.5% and in this quarter we are closing at 13.1%. So we always look at the direction and with our product portfolio, the focus on product mix, and the combination of three-wheeler, premium, international business, all these are going to strengthen our realization per vehicle. That is very important. When you have the realization per vehicle going up, you can always leverage cost and we can also amortize our fixed cost over a larger base. So the growth momentum and the Vida journey will continue. We should not be so much worried about one quarter or two quarters.

Thank you.

I think if you look at many of these markets, international markets, India, I always believe that India has a huge opportunity and the type of investments the government has done on the infrastructure side, especially on roads, and thanks to the consumer class of 1.4 billion who definitely look at two wheeler as a great category for their own income generation and commuting. I'm very sure the growth momentum will continue. Thanks to GST, the entire scenario changed when the government reduced 28% to 18%. It is not only on two wheeler overall. This EV situation has put little bit of challenges but I'm very sure that the need for commuting, especially 50% of the class is self-income kind of customer, rural customer, that momentum will continue in India. Now growth, I said about a strong single digit. It could even be better if things go better in the second half. But we have to be cautious. From the industry point of view and from our point of view, we are optimistic about product range and what we are going to deliver into the market. Now coming to international, last if you look at 2021, 2022, 2023 we saw a lot of challenges and it went to the bottom. Now all these international markets are coming back. Last year we saw a good growth. I'm very sure this year also you'll see similar growth and the momentum will continue. Later you have seen it went down, Africa went down, and we have seen it with Asia. So we are pretty confident that the momentum whatever you have seen will continue in international market and especially for TVs the product pull is very good in the market.

Ronin is a great brand. If you recollect the last 3 years, I always said that we started with 2,000, went to 4,000, 8,000. I'm telling you shortly we will cross 10,000. It is great in India in every state. Thanks to all those customers who love Ronin. It is yet another brand like Apache. I can tell you I don't want to give any guidance on volume because we are building it. Thanks to every customer of Ronin. It has started already in Indonesia in the international market, every market wherever we operate. So it is going to be a long-standing, very good brand for the super premium customers. Once again thanks to all the customers.

EV revenue? You have to give me a minute. Just let me think. About 5,000 crores.

Thank you.

You know investments will be lower but it will not be zero. Please understand product development is still continuing because we can't have only few models. We have to have an all segment models for Norton but it will be lower than this year. Other investments where we are investing this year, some of them will continue, some new investments will be there. Closer to the investment we will let you know. It may not be in Norton. Because we constantly look at opportunities and we'll be doing that. But overall at this point of time it will be about 70% of the current, somewhere around that.

We always look at new opportunities and we want to explore this opportunity. Closer to when we decide, we will share.

Yeah, Africa we invested long back and I'm extremely happy the way TVS brand is preferred in Africa. In this, please understand it takes time to establish your brand. The HLX series HLX 100, 125, 155 is the most preferred brands in this market. Asia is very strong for us. Africa is very strong for us and I completely agree with you, LATAM we are growing ahead of industry which means we are gaining market share year after year. LATAM is going to be the focus for sure, but you have to give 2-3 years time because we need good distributors, very good investment behind brands, we need to have visibility of this brand in the market. So full focus will be of course there. There is huge headroom in Africa and Middle East, huge huge opportunity even for 3 years. So we want to further strengthen Africa and Middle East and strengthen and put strong foundation in LATAM and grow it. So that journey will continue and LATAM will be the focus.

All products. Every country, I have seen there are proportions of premium, super premium, executive and entry level. So every country is a developing country. So we have to play with the portfolio even for the distributor and dealer productivity and their profitability. So we will play with the portfolio and sometimes you can also design and develop something unique for this market. And please remember the Indonesia products are also doing extremely well. Quietly we are doing now about last year we did average of 17,000 per month. Now we are getting into almost 20,000 plus. And this BEX and ScubeX are also in many of these markets doing very well. So the portfolio we have we will leverage that and country specific certain products also we will design and develop. So it's a combination of investment behind some new products, leveraging existing models, and we will take it up in a big way.

Can we get into the last question please?

I think all of you know about Hyundai, their capability in terms of their ability to design, their R&D capability, advanced mobility technology, very clear understanding of human-centric approach country by country. We want to completely leverage that. Equally on the other side, we have an excellent leading edge electric platform, three-wheeler engineering expertise, deep local understanding of Indian market, international market. So we will look at how do we use this both companies leveraging the strength and how we come with a redefined mobility in the three-wheeler category. I can give you so much now. I think closer to the launch I can give you more details including the lead time.

I think what we have to look at is overall how the company is moving. We have done extremely well how we moved from 6.5 to 13.1. Whenever we look at a portfolio, we look at every product and every project. Overall, we looked at performance of the company and I'm very confident this also is going to help us in improving our EBITDA journey.

I think it has started well especially in the Asia market. We are also entering into many markets where we are present. I'm very positive because whether it is IQ or orbiter, it is loved by the customer. But each country is specific, each country is unique. We need to be very close to the customer in understanding what needs they are expecting. Sometimes we may have to also come up with a new model even in electric because customer preferences we have to understand. That is the strength of TVS. We invest behind for example HLX, whatever we are selling in Africa and Latin America, we don't sell even one number in India. So we constantly believe in looking at the customer and coming up with models which are unique to the customer and the usage.

So overall, thanks everyone. I think last year, last financial year is a great year. The company posted the highest ever revenue of 47,270 crores, highest ever net profit of 3,615 crores with best-in-class quality. Our focus on the consumer, strong portfolio of brands starting from Apache, Jupiter, IQ, orbiter, Radon, NTork, TVS iCargo, EV. I'm pretty confident and all the products from Indonesia the company will leverage going ahead of the industry. We will definitely use scale benefits. We will use the focus premiumization journey. We will focus on sustained material cost reduction. We will look at model mix. While there are challenges as I said, we are cautiously optimistic and we will continuously look at improving the top line and continue to grow our market going forward. Q1, Q2, we will closely look at it and we will take appropriate counter measures and we will continue to grow the top line and do best for the industry and the customer. Thank you.