CEOInterviews.AITVS Motor Company Earnings Call for Q3FY26

O

Operator0:00

Ladies and gentlemen, good day and welcome to TVS Motor Company Limited 3Q FY26 post results earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on the touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anamala Jay Raj. Thank you and over to you sir.

A

Anamala Jay Raj0:37

Thank you Mark. Good afternoon all the participants on behalf of BNK Security. Welcome to FY26 conference call of TVS Motor Company Limited. I also take this opportunity to welcome the management team of TVS Motor Company Limited. We have here with us today Mr. K. N. Radhakrishnan, Director and Chief Executive Officer, Mr. Kopal, Chief Financial Officer. Congratulations on good results, sir. I'll now invite Mr. Radhakrishnan for the opening remarks, which will be followed by questions and answers.

K

K. N. Radhakrishnan1:16

Good evening. Good evening everyone and thank you for joining us today. Wish you all a very happy new year and season's greetings to all of you and your family members. I'm glad to share that this quarter also we continue to achieve new highs delivering our highest ever quarterly sales revenue and profits. During this quarter, company sales volume grew by 27%. Revenue grew by 37%, operating EBITDA grew by 51% and operating PBT grew by 56%.

Let me get into more details about third quarter of this financial year. Our performance on sales during this quarter the overall operating revenue grew by 27% and the revenue is at 12,476 crores as against 9,997 crores during the third quarter of last year.

Domestic ICE sales grew by 21% compared to Q3 of last year as against an industry growth of 16%. International market company sales grew by 35% over last year as against an industry growth of 23%. Total two-wheeler EV sales grew by 25% compared to Q3 of last year and an industry growth of 17%. EV two wheeler sales grew by 40% and it has crossed 1 lakh this year 1 lakh 6,000 units as against 76,000 units during Q3 of last year. Total sales of three-wheeler is more than doubled to 60,000 units as against 29,000 units during last year third quarter.

On profits during this quarter companies operating EBITDA grew by 51% and it is at 1,634 crores as against the EBITDA of 1,081 crores during Q3 of last year. The company's operating EBITDA margin improved by 120 basis points at 13.1% as against 11.9% during Q3 of last year. All of you know that during last year the entire year PLI benefits of FY 2425 was recognized in Q4. On a normalized basis Q3 FY25 EBITDA would have been at 12.4%. Which means we got 70 basis points on a sequential basis improvement on EBITDA. On a year-on-year basis a margin improvement of 70 basis points and a quarter-on-quarter basis 40 basis points.

The company registered a PBT before exceptional items of 1,315 crores recording a growth of 57% during this quarter as against 837 crores. During this quarter, company recognized rupees 41 crores as an exceptional item towards the past service cost arising from the new labor codes. Profit after tax for the quarter is 940 crores as against last year's 618 crores.

Now when we look at the first 9 months up to December the first 9 months of the year company's operating revenue grew by 29% and it is at 34,463 crores as against 26,711 crores during last year. First 9 months PBT before exceptional item for the first 9 months is at 3,594 crores as against last year's 2,517 crores a growth of 43%. Profit after tax for the first 9 months period is 2,625 crores as against last year's 1,858 crores. So overall very good growth in the first 9 months this year.

On TVS credit, TVS credit continue to witness excellent growth in disbursement. The post GST 2.0 zero implementation. There is a positives in demand and the market is doing well. The low inflation drove demand across product categories leading to increased sales, deeper market penetration and enhanced market share. We also saw a successful festive season with robust demand. During this period, company maintained its focus on risk calibrated growth across product categories building a diverse book. TVS credit continued to drive penetration of existing products, expand product offerings, scale up distribution while enhancing customer experience and operational efficiency. First 9 months, TVS credit disbursed loans of over 41 lakh new customers, bringing its total customer base to nearly 2.3 crores. The book size is 29,678 crores grew by 9% over last year. TVS credit PBT before exceptional items for the quarter grew by 21% and is at 390 crores as against last year's 321 crores.

On Norton. We are building the lineup which was unveiled in EICMA 2025. I'm very sure you would have had an opportunity to see any of these products. The new Mans and Atlas families position the TVS ecosystem firmly in the premium in the high emotion luxury motorcycle segment and it's definitely going to create a real special super premium experience for the super premium category of our affluent global customers who value craftsmanship, exclusivity and engineering pedigree. We are gearing up launch of new Norton products in the Indian markets as well. We will have a differentiated strategy for Norton. We will give more details closer to the launch.

On Q4 outlook. I think all of us know that we saw very good growth in Q3. We saw post GST reduction industry grew by 20%. Rural grew by almost 19% and urban by about 21%. The GDP growth for this financial year is also estimated about 7%. This robust performance not only reinforces underlying strength of the domestic market but also positions India as world's fastest growing major economy against many challenges in the global landscape. As I told you this year the rainfall has been good and the higher reservoir levels are also going to augur increased rabi crops and this should definitely support the rural sentiments. And as you know that the monetary policy measures implemented by RBI including the total repo rate reduction by 125 basis points in this year is expected to improve the liquidity and credit environment. GST reduction definitely is going to support what we have seen in Q3. So we are expecting Q4 also to be doing extremely well for the industry.

On EV, the Vahan for the first 9 months the industry grew by 14%. And all of you know that we had some challenges on the magnets availability but now it is better availability has become better and the Q3 the Vahan EV industry growth is 7.5% over last year. Q3 EV penetration is slightly lower now but it is going to improve going forward. We have seen very good growth for TVS in Q3. And we are expecting with our products like iQube doing well and also TVS Orbiter it is likely to do well. Commercial vehicle mobility, the TVS King EV and the King Cargo HTV very good response in the market and we are able to also grow here. The Vahan market share has gone up in EV Li category so this is going to help us. So overall I think you will see EV penetration going up in two wheeler and three-wheeler anyway it has almost come to now 30-32% in this quarter so that will go up.

On international market, the market is doing well. Q3 we have seen exports from India growing by 23%. And the demand in Africa continues to grow on a quarter-on-quarter basis. Latam also has grown over last year and this growth momentum in Africa and LATAM will continue. As you know Asia region is also doing well thanks to Sri Lanka coming back in a big way. Nepal continues to do well. Europe continue to have challenges. It is not growing. It may take a few more quarters for the performance to improve. And overall TVS already I highlighted that we have grown ahead of the industry and we are very confident that this momentum will continue both on the industry side and we will likely to do better than the industry growth in Q4. So overall if you look at thanks to GST the momentum in India is good. Industry will have a very good growth. And like Q3 you can expect good growth in Q4 as well. International markets are doing well and it will continue to do well in Q4.

And thanks to our good portfolio of products and our focus on consumers quality new products and very clear attractive quality and technology with features. We are confident that we will do better than the industry growth both in domestic and international markets and we will you have seen the highest EBITDA for the company with topline growth. We will leverage the scale benefits. We will look at more premiumization and better product mix. Our sustained effort on cost reduction will also enable us to continue. And we are confident that EBITDA will continue to grow going forward. Thank you.

O

Operator12:45

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue. The first question is from the line of Chandra Maui from Goldman Sachs. Please go ahead.

C

Chandra Maui13:38

Hi, good afternoon and thank you for taking my questions. My first question is just around the industry outlook that you provided. I think in the December quarter we've seen 20% growth for the industry. Jan to date also on the Vahan retail portal seems to be around the mid to high teens. I think at the previous earnings call at the end of 1 you had indicated you expect sort of this 8 to 10% volume growth for the industry in the medium term. I just want to understand if there's some upside risk to that in your view over the medium term if you see upside risk to this 8 to 10% kind of growth bracket for the two wheel industries.

K

K. N. Radhakrishnan14:18

Definitely, you know the GST is playing and all of us should know that it is not only in two wheelers there is a good basket of products wherein the consumers have got the benefit of GST so it's all playing out. I'm pretty confident that Q4 also you will see anything upwards of 15% you can see in Q4 which is according to me one of the best growth what we have seen so we are very positive about the Q4 growth. So year as a whole if you look at it because you know the first half has not been so great it was only 2% growth and year as a whole you will see somewhere around 9% growth but exit is excellent so that is going to help us the two wheeler industry this year.

C

Chandra Maui15:08

Got it. That's helpful. My second question is this around commodity inflation. So just trying to understand we've seen inflation in the precious metals, little bit on copper, aluminium as well and now there seems to be a reintroduction of the safeguard duties on steel. In the past TVS has passed on some of the commodity inflation with judicious price hikes. I just want to understand what are the offsets available to the company to manage the commodity inflation and have we taken any price hikes in the December quarter as well as the March quarter today.

K

K. N. Radhakrishnan15:44

You're right. I think there are increases in aluminium, copper, zinc, platinum, palladium, rhodium. I think that you will see in this quarter. And we will always look at a combination with our topline growing at the strength of the company has been when the volume is growing we are able to get the scale benefits and we are also able to drive our cost down program and we have been very prudent we keep looking at price increases and if you look at recently we have taken up about 2.3% price increases so this is a constant journey because we definitely want our growth momentum to continue but we want to mitigate the journey with a combination of scale plus cost reduction plus product mix has definitely helped us and some appropriate price increases. So this will be the strategy even in this quarter.

C

Chandra Maui16:45

Got it. That's helpful. And just lastly housekeeping question if you could share the international business revenues and the spare parts revenues please.

K

K. N. Radhakrishnan16:57

IB overall revenue for this quarter is about 2,999 crores and spare parts all put together about 1,183 crores.

C

Chandra Maui17:22

Got it. Thank you very much and all the best. Thanks.

K

K. N. Radhakrishnan17:26

Thank you. Thank you. Thank you.

O

Operator17:28

Thank you. The next question is from the line of Praud Kobar from UBS Securities. Please go ahead.

P

Praud Kobar17:38

Yeah. Thanks a lot for the opportunity sir. My first question pertains to the breakdown of the industry growth. If you can just help us understand what are the categories across both urban and rural we are seeing volume growth being driven from because when you look at the Vahan data it predominantly suggests that players with skew towards premium portfolio and scooters are doing well. If you can just help us understand how the product categories are doing on the ground and within that in rural are you seeing better traction for premium and scooters after the GST cut as a household have better savings in their hand or better disposable income in their hand. Are the bank better of gravitating towards scooters and if any other qualitative color which you want to share on the consumer behavior sir?

K

K. N. Radhakrishnan18:28

Scooters have really done well while the industry has done well. I think one category which has done extremely well is scooter. You remember I always believe that scooters with ICE plus we should always add the EV. We are close to our 40% category share of overall two-wheeler industry. This is exactly what I used to say in the meeting that scooters will grow faster than the industry and that is exactly what is happening in the industry today. Other important thing we should look at the premium and the super premium is growing faster. The executive category of motorcycle is also growing. I think what is happening is the entry-level segment is not growing as much. But if you look at urban rural, urban is about 21% and 19% rural. So rural is also doing well. I don't think we can say that rural is not doing well but urban is slightly ahead. And within rural, overall if scooter has to do well and the premium and the super premium has to do well definitely in the rural also scooters are doing well and thanks to the infrastructure especially roads and road connectivity in many of the rural markets. I think this is definitely helping the scooters and the premium and super premium to grow and of course the support of retail financing.

P

Praud Kobar19:58

Okay. No other thing is related to year on supplies because we did hear about massive shortages during the festival. Even today we do channel check we get a feedback that there are some short supplies on scooters and new launches. So if you can just help us understand where are we on the capacity side what are the plans we have for improving capacity and improved availability of their products so that there is no impact on the retail market share side. And just help us understand what are your plans to ramp up the supplies from where we are today.

K

K. N. Radhakrishnan20:38

See, one thing thanks to all the customers, our products are in very good demand in the market. Thanks to our customers and also recently launched products are also in good demand. You know end of December maintenance off plus a few holidays in January there is a little bit of challenge because end of December there are company holidays on maintenance off which is very important for the factory and then you have the new year day and then Pongal and these are some challenging times where there are some requirements of company holidays. Barring that there are no challenges and for taking capacity increases it takes about 2 months to 3 months and fortunately we have been very proactive in investing behind that and we always believe that the dealer should keep only 21 to 30 days stock because we want products to be fresh to the customer. There may be few dealers where they have to plan a little bit better but we are fully taking care of the supplies for the market and we will continue to do that. Of course in the EV side we had a setback because of the magnet availability. We tried our level best. Now it is recovering. I can tell you that it is recovering and hopefully by another month you will see full supplies of EV also into the market. So overall I think we have been at it in terms of both managing the capacity delivery and thanks to the kind of growth in the market. I think it's a balanced journey.

P

Praud Kobar22:25

Any thoughts on the export market? Final question.

K

K. N. Radhakrishnan22:29

Export is also doing well. You have seen and we are expecting Q4 also should do well. Like I said last time you know Africa the number of the last year had a bad year but industry has come back well and we are growing ahead of the industry and I'm very sure Q4 also you will see this kind of an industry growth and we will outperform the industry because many markets we are doing extremely well and we will continue to do the same kind of focus in Q4.

P

Praud Kobar23:01

Thanks a lot sir. I will get back into Q. That's luck.

O

Operator23:07

Thank you. The next question is from the line of Ben Singh from Morgan Stanley. Please go ahead.

B

Ben Singh23:16

Hi team, thanks for the opportunity. Congratulations for a very good quarter. If you look at other expenses in the previous quarter, we talked about three one-offs in other expenses. But in this quarter also the other expenses growth seems to be ahead of volumes. Any one-off or anything you would like to call out in that?

K

K. N. Radhakrishnan23:36

See the other expenses most of them are related to the variable expenses related to packing freight due to the volume growth. The only one of the things little bit higher this year in this quarter is marketing expenses because you know the number of products we launched. We had about 60 crores of additional expenses because of that. Otherwise if you look at the other expenses one is packing freight in line with that. Then marketing I already told you and new technologies R&D we always put our investments and this quarter we have the maintenance the annual maintenance so we spend about 15 crores which is as per plan. So overall there is nothing unique other than the launch related marketing expenses.

B

Ben Singh24:34

Right, right. And secondly on the commodity side we've seen quality upcycles in the past also but this time it's coming after the GST cut where prices dropped. Do you think it'll be easier for OEMs to pass on commodity price increases in this cycle as the prices dropped quite sharply and customer appetite or affordability is better?

K

K. N. Radhakrishnan24:56

I think it is a balanced journey. I think definitely when we fully passed on the GST benefits to the customer that has helped for us to also grow and the industry also to grow. So it is not easy to just increase prices. I think as a responsible company we want to give better value to our customers. We look at that's why we invest behind variants, new technology, new attractive features. Otherwise you cannot hold on to the demand higher than whatever you have done. So this is a very balanced journey and we have to also understand that when you give better value to the customer they will like to buy the vehicle. So we have to look at whenever the material cost goes up we have to have a balanced effect and that's why when you grow the top line you can get the scale benefit and premiumization. I think company has been always focusing on the premiumization so better mix you are able to focus and scooters doing well is also another important strategy. So we are very focused on not increasing prices, we want to give better value to the customer and wherever there is opportunity we want to take little bit price increase.

B

Ben Singh26:12

And just lastly, precious metals have been the one which have seen the most inflation. Any number you would want to share as percentage of sales how big that is or how do you see that because we've seen very sharp increases in platinum palladium and all?

K

K. N. Radhakrishnan26:30

See overall we have to look at it because I don't think because when the customer looks at it they want to look at as a product so there has been increases in aluminium, copper, zinc everywhere. So platinum, palladium, rhodium and with BS6 the contents are little higher in these products. So as a total we look at what is the impact and impact maybe about 2.3%. I don't think it is huge. So that's why I said how do we make sure that we are able to increase the customer demand? How are we able to look at growing the top line? How are we able to look at the mix? And that should be the focus according to me. And we can also look at a small passing on to the market in terms of pricing which is appropriate. So this is the combination of strategies we use.

B

Ben Singh27:29

Right. Right. So in that sense the point 2% price you've taken and the 2.3% increase that you're talking about in commodities in a way the equation looks balanced. In that sense right that is a fair way to conclude.

K

K. N. Radhakrishnan27:41

Yeah, maybe see if material cost increases also when scale is done that also supports the suppliers you know when they have better scale on the same platform that's why I always believe that topline growth has to be very very robust and if you can also look at same platform then the suppliers will get huge benefits so it is a kind of win-win for everybody.

B

Ben Singh28:08

Great, great. Thanks sir, thanks.

O

Operator28:14

Thank you. The next question is from the line of Kanjan from BOA. Please go ahead.

K

Kanjan28:24

Yeah. Hi, thanks for taking my question. So I just wanted to go back to your comments on the industry domestic industry growth. You know you clearly a lot of confidence on Q4 and you know you mentioned shortages in the market as well but if I were to just think of fiscal 27, any thoughts you would like to share that you know do you expect this sort of momentum to continue going into fiscal 27 is it fair to say that we can have another 8-9% sort of growth here in fiscal 27 as well? The reason I ask this is because we're not seeing this sort of demand recovery in some of the other sectors. So if auto is just about two quarter of pent up demand and it starts to come off, any thoughts from your side will help us think better about the cycle.

K

K. N. Radhakrishnan29:11

I will answer in two steps. First, I never said there is shortage for products of TVS in the market. I said there were challenges in EV iQube and now recently launched Orbiter primarily because of the magnet availability. Now that is also easing out. So from capacity point of view we are also taking proactive action. So that is first point. It is promoting who there is a shortage in the market. I think it is for the dealers to plan and

We are here to support them with the products on time. Now coming to the growth rate, I'm very confident that Q4 also you will see the benefit because GST was implemented, I think third week of September or fourth week of September. So you will see the first half of next year is also going to be very good because the benefits will come into the industry. Second, I want to give a little bit of a long-term answer. With the kind of infrastructure getting built in India, with road connectivity, rural, urban, semi-urban getting better and better connectivity, and please understand the mobility needs, and given the challenges on the public transport system, and I always say that the self-employed is a good proportion in India, given that the best segment is two-wheelers because customers can afford it, customers can definitely use that for mobility as well as the 50% of self-income group. So overall, I'm a firm believer that 8 to 9% as a CAGR you can look at on a long-term basis. Okay. So second half of next year also I'm very sure, if not like first half, you will see many of these things getting implemented in India. Overall, the GDP is likely to grow. So with that, I think you will see a robust growth in the two-wheeler even in '27. I don't want to give some projections as of now, but overall this is my preliminary thinking.

A

Analyst31:12

Got it. No, that's helpful. So the second question that I had was again on, not you know, congratulations on the unveil of the product. Just wanted to hear your thoughts on how do we now think about the investments in the business because, my understanding, we've also invested almost 900 crores in subsidies in this quarter. So if you can give us some color on how do we see the investments going forward and how soon we sort of also start to see the losses come off. So some color on Norton investments and the breaking even or whatever loss reduction in the substitutes.

K

K. N. Radhakrishnan31:55

See, Norton I'm extremely happy. The products are getting ready. Okay, we are now preparing for you. I'm very sure all of you whoever has visited Milan show, you have seen the products, and these products are going to hit the market in 2020, 2026 this year. You will see the growth coming, and they are super premium, and it is going to definitely delight the customers globally. So once we have a very clear plan of action to go to the market, we will definitely share with you, but this is a very, very important year from the Norton point of view. Now coming to investment in Norton, you know, the first year we have to put the products and we have to support it with marketing because we want to build the brand in a very, very strong way. We will definitely invest behind the right areas on technology and marketing. Okay. Now coming back to the second question on 900 crores, you know, the delta this quarter has been TVS Credit Services. We have invested about 200 crores, and for the pre-launch or pre-marketing of Norton, we have given another 60-70 crores additional during last quarter, including the EICMA show, Milan show. So I think these are all very measured delta, and also the ion project we have invested about close to 100 crores. So investments are in the right direction, in the right products, and TVS Credit Services, you know, the kind of book size we are growing and the profit it is generating. So we will look at the investments most appropriately based on where the strategic focus is there for the company.

A

Analyst33:40

And sorry sir, just a clarification. You mentioned 60 crores incrementally in Norton, but the total, like I'm just trying to get the breakup of this 900 crores.

K

K. N. Radhakrishnan33:51

This is compared to quarter last quarter. Last quarter is what I said.

A

Analyst33:58

Okay, so incrementally 60 crores more in Norton and 200 crores in TVS Credit is the incremental delta from last quarter. Is that understanding?

K

K. N. Radhakrishnan34:07

Correct. Correct. Correct. Correct. Correct. Correct. Correct.

A

Analyst34:10

Uh, got it. So last question, you know, just very, you know, from a mix perspective, premiumization is something you said certainly helps us from a margin management, cost mitigation. Scooters the way it is growing, how do I think about the margin profile of scooters versus, let's say, bikes or mopeds? Any color you can give? Is scooters at parity? Is it premiumization within scooters that's helping? You know, this quick one on that.

K

K. N. Radhakrishnan34:44

We focus on the customer and we focus on technology and features, okay, and we want to look at overall portfolio. So while I said product mix is very important and premiumization is very important, and we are focusing on that. Okay, we have to look at the customer segment and try to be leading many of the segments. So that has been our focus. Okay, we always look at the total portfolio contribution. Okay, we don't look at segment-wise. Okay, segment-wise is important, I agree. But we want the overall topline to grow ahead of the industry. We want to look at how we can increase our premium category share to go up, also scooter category share how to go up. So we do interventions with respect to products, variants, and making sure that they grow faster than the industry.

A

Analyst35:43

Okay. Got it. Thank you so much sir.

K

K. N. Radhakrishnan35:47

Thank you.

O

Operator35:49

The next question is from the line of Sonel Gupta from HSBC Mutual Fund. Please go ahead.

S

Sonel Gupta35:57

Hi, good afternoon. Thank you for taking my question sir. So first question I had was on Mexico. Could you sort of tell us what's the impact of the new duties? How much were we paying currently and what is our exposure to that market?

K

K. N. Radhakrishnan36:13

So we see, first of all, we are now building Mexico. Okay, as of now, while there are some impact on the duty, we are also looking at local localization, so we are not seeing a serious impact at this point of time because the volumes are low, and we are also trying to increase our local content, so possibly it may take about a couple of months' time, so it is not going to put huge impact on TVS Motor.

S

Sonel Gupta36:42

Okay sir. So I mean like currently it's like what 10% of your volumes or something like that of export volumes and just

K

K. N. Radhakrishnan36:49

No no no, much much lower, much much lower.

S

Sonel Gupta36:54

Oh

K

K. N. Radhakrishnan36:54

Very small.

S

Sonel Gupta36:58

Okay got it. Okay that's helpful. So the other thing was, could you tell us what was the EV three-wheeler volumes for the quarter and the EV revenues overall for the quarter?

K

K. N. Radhakrishnan37:08

EV revenue overall means you want including two-wheeler EVs?

S

Sonel Gupta37:12

Yeah.

K

K. N. Radhakrishnan37:15

Yeah. EV.

S

Sonel Gupta37:17

Yeah. Three-wheeler volume.

K

K. N. Radhakrishnan37:20

Let me just, just a minute.

We must be around

I think you have to give me one minute.

S

Sonel Gupta37:38

Okay.

K

K. N. Radhakrishnan37:49

Around around 8,500 to 9,000 because every month it has been increasing. So around around 8,500 numbers in this quarter.

S

Sonel Gupta38:01

Okay sir. And revenues for EVs.

K

K. N. Radhakrishnan38:19

I'll get back because I have to check.

S

Sonel Gupta38:22

Okay.

Got it. Sir.

Yeah. Yeah. Just a related question was on like PLI. We've been previously indicating about a 50 benefit because of PLI. Would that have gone up in this quarter or it's still at those sort of

K

K. N. Radhakrishnan38:38

A little bit? It has, it has little bit gone up. It is about 7.

S

Sonel Gupta38:44

Okay. And I mean like given the, I mean like if I go back previously, I think almost 8 to 10% of our revenues are coming from EVs, and if you take a 13-14% sort of PLI benefit, then it should be almost like 1.3-1.4% of revenue, I mean like 730 bps. So I mean like so the gap, I understand some to some extent it is because of some of the suppliers who are getting those benefits and therefore you not accruing those, but still is there a scope for increasing this or what is the gap here that we can sort of improve this?

K

K. N. Radhakrishnan39:22

First of all, first of all, thanks to government on the PLI. I think it's a, you have answered in your question itself. It's a combination of the company and some of the suppliers getting the benefit. Overall, okay, for us it is about 7. We have not lost any opportunity and we have not missed any opportunity in securing the PLI benefits from the government. Okay, number two, I think our endeavor is to focus on delighting the customer, whether it is iQube, whether it is TVS Orbiter, TVS King, and as you know, our numbers have been growing ahead of the industry growth. So definitely this is going to help us to improve the EV profitability going forward. So systematically, we always believe in customer and then topline growth, that will result in all the growth of the bottom line. Same principle what TVS Motor uses, even in EV we use that.

S

Sonel Gupta40:22

Sure. So just trying to understand, so whole EV portfolio is now accruing PLI or is there some portion which is still not accruing any PLI benefit?

K

K. N. Radhakrishnan40:30

Yeah, we are getting, we are getting PLI for the, for the Orbiter as well. There are, there are few products where, you know, above certain price, you know, there we are not eligible because of the, as per the, you know, so that volume is a very small volume.

S

Sonel Gupta40:58

Got it sir. Okay sir. Great. Thank you so much. Thanks for asking my questions.

K

K. N. Radhakrishnan41:04

Thank you.

O

Operator41:06

The next question is from the line of Rakkesh Kumar Rakkesh from BNT. Please go ahead.

R

Rakkesh Kumar Rakkesh41:14

Hi, good afternoon and thank you for taking my question. My first question was around the investment and capex plan for the year. At the start of the year, you had spoken about capex target of 1,600 crores and investments of 2,000 cr. In the first half we had done capex of about 1,000 cr and in three quarters we have done investments of about 2,000 cr. So are you looking at revising those targets that you had for this year?

K

K. N. Radhakrishnan41:42

The capex will be around 1,700 crores or slightly around that because we are also now looking at increasing some of the areas capacity given the kind of growth what we have seen. Okay. And investments around 2,900 crores overall.

R

Rakkesh Kumar Rakkesh42:14

Got that? And

K

K. N. Radhakrishnan42:15

So far we have invested. Yeah.

R

Rakkesh Kumar Rakkesh42:18

Yeah. Sorry.

K

K. N. Radhakrishnan42:19

Tell me.

R

Rakkesh Kumar Rakkesh42:22

So just a clarification, under earlier to Gungjin's question, you last quarter hadn't shared the Norton investment. So if you could just share what was the investment last quarter over which there is an incremental 50-60 crores.

K

K. N. Radhakrishnan42:36

I think last quarter is about 240 crores and this quarter about 290 crores, not

R

Rakkesh Kumar Rakkesh42:45

Perfect, thanks a lot. My second question was around your commodity cost. You spoke about 2.3%. Is that the total commodity basket impact or only the precious metals which we are talking about and

K

K. N. Radhakrishnan43:00

Total, total, total. Maybe yeah, total maybe about 4 at best.

R

Rakkesh Kumar Rakkesh43:06

Okay, and has all of that already been flowing through your material cost or there's something which is yet to come through because your production last quarter was lower than your whole sales, so some of the sales you would have done would be based on the earlier period.

K

K. N. Radhakrishnan43:22

No, some are in Q3, some are in Q4, some are in Q3, some are in Q4. Okay, so this is where I said, you know, we want to look at very closely the top line and look at growing faster than the industry. So you get the scale benefits, and some areas we also increase prices. For example, early part of this quarter we have taken about 3% price increase. So it's a balanced review, you know, what we look at.

R

Rakkesh Kumar Rakkesh43:50

Got it. That's very helpful. Thanks a lot.

K

K. N. Radhakrishnan43:56

Thank you.

O

Operator43:58

The next question is from the line of Capel Singh from Nomura. Please go ahead.

C

Capel Singh44:05

Yeah, good afternoon sir and congratulations on a very strong performance. My question is on the current, currently what is the realization we've had for the quarter? Is there some hedging we are calling or we are realizing as per the spot rates?

K

K. N. Radhakrishnan44:24

No, we have a hedging policy and we strongly follow that. It's a very robust policy where we cover the net exposure over a period of time, and for the current quarters I think the realization is around 88.

C

Capel Singh44:42

Okay. So because rupee has been depreciating further, so as your hedges roll

K

K. N. Radhakrishnan44:48

Probably you may get the policy, those benefits will occur over a period of time. It's a policy where we cover the next few quarters.

C

Capel Singh44:58

That's not few quarters, few weeks.

K

K. N. Radhakrishnan45:03

12 weeks I believe.

C

Capel Singh45:05

Yeah.

Thanks sir, and we are able to hold

K

K. N. Radhakrishnan45:10

Yeah, we are able to.

C

Capel Singh45:12

Okay.

K

K. N. Radhakrishnan45:13

Yes. Yes. Yes. Yes. Yes.

C

Capel Singh45:18

Question was on electric vehicles.

K

K. N. Radhakrishnan45:20

So, you know, we launched the Orbiter.

C

Capel Singh45:24

How has been the response and the customer profile difference between iQube and Orbiter if you can give some color over there, and also on the EV profitability journey, where are you, when can, at what volume level do you turn a bit? Give some color.

K

K. N. Radhakrishnan45:41

See, first on Orbiter, this is the product differentiation, you know, how it is priced. So it is basically to give it to those set of customers who want a lesser range and they can look at this as a differentiated product. Okay. It's too early to really come back actual usage and how it is performing. But so far, whatever we have seen, the markets where we have launched, we have not launched in all India, the demand is excellent, and we are ramping up now. First we'll cross that 10,000 numbers per month. Okay. And the good news is iQube is also growing, Orbiter is also growing. So from the customer point of view, excellent reception for both the products in the market. That's number one. Overall it is growing ahead of the industry. Okay. And on contribution, we are positive and we are becoming better and better quarter after quarter because that is our focus. And like I said, overall when we look at the EBITDA margin, I'm pretty confident that while the volumes are growing, I'm very confident that this EV will also become EBITDA positive and it will also grow forward the overall PBT level. So the focus is fully on the demand creation, growing the market ahead of the industry, increasing the contribution very systematically. Okay, then we are pretty confident that it will also start, and overall please look at our EBITDA journey as a company. You know, this quarter is the highest, 13.1, which means EV is also doing well, please understand.

C

Capel Singh47:34

Yeah sure sir, but can you give us the capacity numbers for overall and for EVs that we have currently?

K

K. N. Radhakrishnan47:44

EV we are producing about average 30,000 to 32,000 of iQube, and as of now we are producing about, they're coming closer to 10,000 of Orbiter.

C

Capel Singh47:58

And any like any capacity number you have that you are planning to have for

K

K. N. Radhakrishnan48:04

We are reviewing that for next year. We are reviewing that for next year, and we are also investing. Possibly in the next call I'll be able to give you the kind of increases we are looking at, but we are definitely investing in capacity because this is something which is growing.

C

Capel Singh48:22

So and sir, just lastly on the investments, we have increased the guidance to 2,900 crores from 2,000 crores. Where is the additional investment going towards?

K

K. N. Radhakrishnan48:38

Investments, one is on Norton, another one is on TVS Credit Services.

C

Capel Singh48:52

Okay.

K

K. N. Radhakrishnan48:52

No, overall, overall

And, you know, we have also invested behind the ion project which is part of the PDTVs. So and the e-bike business.

Okay. So overall these are the areas we have done, and we have also strategically we have invested in Dubai for international market. I think all this we highlighted in the last three quarters.

Okay, this is primarily for more focus in the international and growing the international market. So these are the areas where we have invested.

C

Capel Singh49:45

Sure sir. Thank you and wishing you all the best.

K

K. N. Radhakrishnan49:49

Thank you. Thank you.

O

Operator49:51

Thank you. The next question is from the line of Ragunan from Dubama Research. Please go ahead.

R

Ragunan50:00

Thank you sir for the opportunity. Congratulations again for a strong quarter once again. Sir, firstly, exports have witnessed a robust growth, more than 35% on YTD basis. Within exports, how do you see the potential for Jupiter model in future? In FY24, Jupiter used to be 60,000 units. How do you expect the ramp up ahead?

K

K. N. Radhakrishnan50:28

Jupiter is overall much ahead of the 60,000. Okay, if you look at Jupiter alone now, we are doing on an average, you're asking international or domestic?

R

Ragunan50:42

International sir, export market. I'm trying to understand how can be the potential in future.

K

K. N. Radhakrishnan50:50

Yeah. Potential in future for see markets like Asia, some markets in Middle East, and some markets in Turkey. Okay. A few markets in Africa, very few markets in Africa, some markets in Latam also ASEAN. So I think Jupiter is a great brand, and what we are trying to look at is each of these markets we are trying to leverage by marketing this product, its advantages. So it will grow this year also, it will grow. Overall scooters will grow in international market. I may not be able to put a number to it, but fortunately we have the product, we have the capacity to give it to the market, and Sri Lanka coming back in this category is a big, big advantage because Sri Lanka is a big scooter market as you know, and Jupiter is one of the key players in Sri Lankan market.

R

Ragunan51:49

Got it. Thank you. And on the commodity side, would you also have hedges sir which can delay the impact of the recent commodity price increases?

K

K. N. Radhakrishnan52:02

We closely monitor here because this is something we also take advice from hedging agencies, and we very closely work with those people. We are not hedging at this point of time. We take advice. That's what I said.

Okay. According to me, you know, we have to closely monitor the situation and then work, but what is most important is you have to improve the scale. Scale can help you to absorb, then you have to look at category by category, and we can look at what kind of overall value you can give to the customer, and that will give you an opportunity to look at some small price increases. I'm not saying fully you can pass on, but you have to look at in a balanced way.

R

Ragunan52:55

Got it.

So scale, price hike, product mix, improvement in depreciation, and most importantly vendor

K

K. N. Radhakrishnan53:04

Product mix, see, scale and product mix gives a huge benefit to even the supply chain. You know, they are also able to, same platform, when the volume goes up, they are able to also cut down the cost. Because that's why I said win-win can come only when you are able to look at the overall scale going up, the revenue going up, numbers going up. So that is very, very critical.

R

Ragunan53:28

So Q4 gross margin you should be able to maintain sir as a combination of five besides the commodity.

K

K. N. Radhakrishnan53:35

I don't want to give any guidance. I can only tell you that I already gave you in my opening remarks. You have seen our performance quarter after quarter. The same performance will continue because we don't want to give any guidance on gross modeling. But I can tell you we are confident about growing ahead of the industry. That is going to help the company, and our strategy of looking at the product mix, maximizing the scale benefits, also continued effort on our cost reduction. These are all going to help the EBITDA journey.

R

Ragunan54:09

Got it sir. And last question sir, on 2026 should see the launch of Norton motorcycles that you had shown in EICMA. And apart from that, you had also showcased that N1 electric maxi scooter and ESX which is the electric motorcycle. What can be expected on the electric side for 2026?

K

K. N. Radhakrishnan54:36

See, the strength of TVS Motor is very strong R&D and new product development capability. We look at the customer very closely. I think those are all, I would like to say that certain products and the concepts what we had displayed there. Okay. Closer to the launch I'll tell you the timeline. At this point of time, I think we believe in our strength of R&D and new product development capability. Most importantly, we want to focus on the customer and delight the customer. That strategy will continue as a company.

R

Ragunan55:11

Wonderful sir. And any date for the listing of this and share? That's all from my side.

K

K. N. Radhakrishnan55:21

What is that?

R

Ragunan55:23

Sorry. Any date list? No, no. The listing, listing is take is still taking time. We are closely following up with SEBI.

K

K. N. Radhakrishnan55:33

We are only continue, we will continue to follow up more closely. That is the status now.

R

Ragunan55:39

Got it sir. Thank you.

K

K. N. Radhakrishnan55:41

I, it's not in my control. We are not able to give a date. Yeah. I think we should close this now. Can we have the last question?

O

Operator55:52

Sure sir.

K

K. N. Radhakrishnan55:54

Yeah.

O

Operator55:56

The last question is from the line of Himmanu Singh from BNP. Please go ahead.

H

Himmanu Singh56:03

Hi. Thank you sir for the opportunity. Sir, I just wanted to understand like, given the commodity price increase which we have seen in Q4, what is the impact you see like without the price increase, just the impact from the commodity increase on margins?

K

K. N. Radhakrishnan56:25

I think, I think this is the fourth time or fifth time these commodity prices plus minus are likely to happen in every quarter. Okay. Sometimes we have seen softening, sometimes we seen marginal increases. I like I said, the strategy of the company is always to look at delighting the customer and giving the best value to the customer, and thanks to the industry it is doing extremely well, and we have been, thanks to our products and our customers, we have been also growing very well on the top line. So continue to grow the top line, continue to get the benefit of scale, continue to work with the suppliers and look at what kind of cost reduction we can bring in, and very clearly work on other cost reduction initiatives, and wherever possible without hurting the customer, increase the prices wherever it is possible. Okay. So this is a continuous and a constant journey company looks at it. Okay. And most importantly, you look at our EBITDA journey. You know, we have to look at whether are we improving quarter after quarter on our journey. Okay.

H

Himmanu Singh57:34

Hello.

Awesome. Thank you so much.

K

K. N. Radhakrishnan57:37

Thank you. Thank you. So I want to thank everyone. You have seen the Q3 performance and the accelerated growth momentum, and the kind of performance on highest revenue and profits. We are extremely happy about the revenue on 12,474 crores, and I'm with the best-in-class quality, unwavering focus on consumers, and the kind of strong portfolio of brands like Apache, Ronin, Jupiter series, iQube, Orbiter, Raider, HLX series, Radon, TVS King, TVS King Cargo, both ICE and EV. I think we will grow ahead of the industry, and thanks here to all the customers both in the domestic and international market. We will continue to leverage scale benefits. We will focus on further strengthening our premiumization journey. Consistently look at the consistent material cost reduction. I think this will be the focus to further improve our EBITDA journey. As you know, we have been consistently performing on topline, and we have been also consistently focusing on growing the EBITDA quarter after quarter. Thanks to every customer, and we are confident that company will continue to grow better and better. Thank you. Thank you everyone.

O

Operator59:00

On behalf of BNK Securities India Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

TVS Motor Company Earnings Call for Q3FY26

About K.n. Radhakrishnan