TVS Motor Company Earnings Call for Q1FY27

Good evening. Good evening everyone and thanks for joining us today. We are delighted to share the Q1 performance of this financial year. As you know, comparing with last year's Q1, the overall sales volume has grown to 1.63 million from last year's 1.28 million in the same quarter, a 28% growth. The revenue is at 13,896 crores, a 38% growth. Last year's number was 10,081 crores. Operating EBITDA grew from 2,660 crores to 3,779 crores, a 41% growth. Operating PBT grew from 2,115 crores to 3,040 crores, a 41% growth, and profit after tax grew from 776 crores to 1,174 crores, a 51% growth. So once again, thanks to our entire customers because this has been possible only because of our customer centricity approach and strong brand across all brands and our sustained focus on cost reduction initiatives taken up by the company. Once again, we would like to thank our customers for this significant milestone.

Now I give you more details about the Q1 sales of FY27. The total domestic ICE sales grew by 21% compared to last year's Q1, against the industry growth of 13%. The two-wheeler international market grew by 31%. And two-wheeler overall ICE sales grew by 23% compared to last year, against the industry growth of 21%. Two-wheeler EV sales grew by 86%. All of us know that in the first quarter the EV industry has significantly grown in India. We did a volume of 1,36,000 in Q1 this year as against 70,000 during the first quarter of last year. Total sales of three-wheeler also grew by 48%. They are at 67,000 units this quarter as against last year's 45,000.

On financial performance, as I said, the company posted its highest operating EBITDA of 3,779 crores, a growth of 41% for the first quarter, and this is against 2,660 crores in the first quarter of last year, FY26. The company's operating margin improved by 30 basis points to 12.8% during the first quarter, and this is against 12.5% last year's first quarter. The company posted highest PBT of 2,589 crores, recording a growth of 51% for the first quarter as against 1,750 crores in the first quarter of last year. For the quarter, this quarter includes a fair valuation gain of investment held by the company amounting to about 150 crores as against a fair valuation gain of about 28 crores during last year's first quarter. The current quarter's company profit after tax grew by 51% to 1,174 crores as against 776 crores during the first quarter of FY26.

We are also proud to announce that recently our long-term facilities credit rating has been upgraded from CARE AA plus to AAA. The highest level of creditworthiness awarded by CARE Rating is a direct reflection of our consistent performance and the trust we have earned and the deep responsibility we carry as we shape the future of mobility. This recognition further strengthens our ability to invest for the long term, expand our global footprint, accelerate innovation, and create sustainable value for all stakeholders.

TVS Credit performance has been outstanding. TVS Credit Services reported a sustained growth in disbursement supported by improved consumption demand traction across key retail financing segments. Consumer durable financing growth was driven by higher discretionary spending and premiumization, increased reach and penetration. The two-wheeler category witnessed strong demand due to steady semi-urban and rural participation and marriage season buying along with an increase in electric vehicle growth. During this quarter, TVS Credit continued to enhance its capabilities in AI, data and analytics and technology to drive better risk assessment, customer experience and operational efficiency. TVS Credit further expanded its presence across semi-urban and rural India, increasing its network to nearly 62,000 touch points across the country. TVS Credit disbursed loans to over 14 lakh new customers, bringing the total customer base to nearly 2.6 crores. The book size of TVS Credit grew by 19%, now at 32,653 crores as against 26,898 crores last year. Profit before tax for the quarter grew by 16% to 283 crores as against 243 crores during the first quarter of last year.

On international business, in Q1 we recorded highest ever international business sales of 4.68 lakh units, a growth of 33% year-on-year. The performance was driven by sustained demand across key international markets and continued strengthening of our distribution. In fact, the demand is much more. We are enhancing the capacity to meet the demand. This is very positive news. The HLX series has got huge pull from the market and we are very happy that this segment is doing extremely well, and all the other product ranges are also doing extremely well in the international market. We are investing behind capacity and we are confident that we will be able to significantly improve these numbers quarter after quarter on two-wheelers, equally on three-wheelers. Africa continues to be a key driver of export growth, supported by robust demand for two-wheelers and three-wheelers. Specifically, I want to thank all the HLX customers in Africa and three-wheeler customers. The Latam region has also started doing well for us. We are growing ahead of the industry. We have just started our journey in Latam and I am pretty confident this is one market which is very important for us, and the growth momentum is very good. We are now present in most of the countries in Latam and we will start investing in marketing and products. I am pretty confident that we will continue to grow ahead of the industry, leveraging our products from India and Indonesia. Asia performance has been pretty good and we are growing very well here too. We will continue to grow ahead of the industry in this market as well. We remain focused on strengthening our international footprint through market expansion, product portfolio enhancement and deeper channel engagement while continuing to capitalize on growth opportunities across emerging export markets. We are investing in premium products and also putting a lot of investments behind brand building initiatives. I am very sure that a product like Apache is going to do extremely well, along with Ronin.

Some of the key highlights: during this quarter, TVS HLX crossed 5 million. 13 years back we started this journey on the TVS HLX series. Today we have HLX 100, 125, 150, and all these brands are doing extremely well in many markets. What is more delighting for us is that the last 1 million happened in the last one year. So the speed has gone up, the demand has gone up. The HLX brand stands for its customer durability, reliability and low maintenance costs across Africa, Middle East and Latam. We have also launched TVS 164V in some more markets this quarter. We also unleashed the Ronin monotone variants in many international markets. I am pretty sure that Ronin is one brand that is going to do extremely well in the international market as well. As you know, in the domestic market Ronin is doing very well. Now we are also expanding multi-products into these markets in addition to HLX. Now RTR 180, 200, 310 are all getting launched in various markets. The Raider, TVS Raider, is also getting introduced in Egypt. I am very sure this is going to help us strengthen our North African region. We have launched iQube EV Max in Nepal, strengthening our EV portfolio starting in the international market.

Now coming to Norton. Norton motorcycles, we have very clearly highlighted. You have seen Max Carr and Max, the superbike and the naked and sport, and also the Atlas and Atlas GT. It is getting ready. Production has started for Atlas and Atlas has started production in Hosur. I am very sure that Norton models, the highest end super premium motorbikes, are taken with utmost focus on design, quality and performance. These four models, which are the first models made under TVS Motor ownership, will launch in UK, France, Italy, Germany, Spain and India, and later this year in the US. Norton motorcycles have marked the rollout of the first models at TVS Motor Company's Hosur manufacturing facility in June, and it has started moving into Europe. I am very confident that you will see this product in the next quarter. Atlas is one of the most significant additions to Norton in the modern era, engineered for sales across every Norton market, both present and future. Atlas and Atlas GT models return the story to adventure and sport touring segments respectively, and these categories together account for a substantial part of the growing share of global motorcycle sales. I am very sure that TVS Motor and Norton, the British design engineering capability with Indian manufacturing excellence and our focus on customer, shared commitment to quality for customers worldwide, it is going to make a grand impact in many of the markets where we are planning to launch.

You would have all seen our premium bespoke experience channel, TVS Quad. We have recently announced this and we are going to experience it in India soon. Quad is our strategic commitment to redefining premium ownership by bringing together innovation, personalization, immersive engagement to build deeper customer connection.

Now coming to the outlook. When we look at Q2, the industry is likely to do very well. I am very sure it will maintain the same momentum. A double-digit growth is the minimum we are expecting in the market, very healthy ICE demand. EV could be similar to the growth we witnessed in Q1. Overall the outlook remains very strong. We are looking at, while there are challenges on monsoon progression and some elevation in food and energy prices, the demand looks very strong. The domestic demand is supported by GST rationalization and some relief from income tax, and affordability is going to help us. We are pretty confident that you will see July, August, September same momentum, slightly better. On the international market, we are expecting the same growth rate to continue or slightly better, and we are also investing behind capacity that is going to help us.

You would have seen the overall growth in Q1 was very good, and we are expecting the growth in the industry to be slightly better in Q2. The EV growth we saw about 67% in the first quarter. I am expecting the growth to continue in Q2. Overall, there are many structural demand drivers, replacement demand, affordability, continued EV adoption, all these are going to be supportive. I am pretty confident that TVS will do much better than the industry. In Q1, because of the geopolitical conflict, there was volatility in commodity prices including steel and aluminium, there were sharp increases in raw material cost, and this translated into input cost pressure and intermittent supply chain disruptions affecting availability, especially in April. The supply was affected for us. Now we have recovered. May and June were much better, and we will continue the momentum in July, August, September. We are also investing behind capacity, like I said last time. What is most important is that we have been able to mitigate these cost increases through topline growth and also some price adjustments in quarter one. We are closely watching and will do appropriate opportunity-driven price increases in Q2. Cost optimization and management scale benefits will continue in quarter two. Despite all these uncertainties, we are very happy that we had healthy growth and we are focusing on continued growth going forward.

On the EV side, I think you would have seen in Q1 the penetration has already, in the month of June alone it is over 10.6%, which is a big change. We continue to lead the Indian two-wheeler EV market and we have grown ahead of the industry thanks to our portfolio of iQube and Orbi. We are extremely happy and thankful; we have crossed 1 million iQube. It has played a key role in the journey of electric mobility adoption in India. Thanks to the government for all the support given for early adoption of EV. iQube has grown into one of the most preferred electric scooter brands and the country's favorite family EV. The milestone marks an important chapter in India's electric mobility journey and underscores the country's progress towards a sustainable, smart, reliant mobility future.

On commercial mobility, when we look at the three-wheeler EV penetration, for the first time it has crossed 40%. Significant growth, and here also we have grown ahead of the industry. We want to continue to invest and grow in this segment. We have also announced our strategic partnership with EOP to strengthen last mile LPG cylinder distribution to sustainable commercial mobility solutions like cargo. We will continue to invest behind overall capacity for our three-wheeler both in domestic as well as international market.

I already highlighted there was a sharp upward trend in commodity prices during two months. But we are closely watching and appropriately looking at opportunities to give price increases, equally leverage the cost benefits, product mix, geography mix, and this journey will continue. I am very confident that during Q2, because we will be getting ready for our season which is October and November this year, and there are planned launches during that time which are going to delight our Indian customers. Our complete product portfolio, unwavering focus on consumers, our quality, new products, and very clear focus on attractive quality features and technology. TVS Motor is confident about outperforming the industry both in domestic and international market. We continue to navigate cost pressures and supply chain constraints during Q2. As we speak, customer retail demand across both two-wheeler and three-wheeler is very robust, and we are trying to catch up with increased capacities both in domestic and international market. During the first quarter, you would have seen EBITDA at 12.8% despite all these pressures. We will continue to leverage scale benefit, better product mix, sustained effort and cost reduction, which will enable us to further improve our EBITDA. Thank you.

See, we had about 40,000 capacity. We are now moving to 50,000. We are constantly reviewing what the next set of capacities required, and at this point of time this has to be closely watched and we are investing behind that. Same way on the EV side, three-wheeler side also we are looking at capacities. Like I said, we had about 20,000 capacity. Now we are moving to about 30,000 capacity in three-wheelers. A good proportion will be on the EV side as well in three-wheelers. So there is an opportunity to grow further. Capacity can be taken up step by step because it takes about three to four months to increase. So we are not so worried about expansion. We have significantly increased our overall two-wheeler capacity to 8.3 million this year, but it will happen over a period of quarter after quarter. On EV, if you look at it, initially started with urban and we used our current main dealer network. Now we have started supplying to the semi-urban and from there we will start moving to rural India. The iQube is a scooter and customers are agnostic to the technology. They love iQube. Today the common man has started buying. Initially it was more of people looking at innovation, new technology, but as we progress month after month, we see many customers who otherwise would have bought an ICE scooter or a motorcycle. In fact, some people from the motorcycle category are also moving into scooter.

See, overall we have an excellent range in scooters. If you look at it, the old Scooty, of course we have stopped production, but the other scoot is still there. The 100cc scooter is still there. We started Jupiter 110, then we did NTorq 125, then Jupiter 125, now we have NTorq 150. All the brands are positioned on customer segments very carefully and these customers love these products. We always believed that the scooter category will grow substantially. If I now include ICE plus EV, the scooter category share in India is almost 40% and it is going to grow. Secondly, when we look at Jupiter 110, Jupiter 125, NTorq 125, NTorq 150, we constantly upgrade and give new technologies and features to our customers because we believe in giving something new every time. This is on top of best-in-class durability and reliability. We have scored very high, number one and number two positions in scooter category. We always maintain less than 30 days of stock with the dealers. We do not want to lose retail, but all cash and carry dealers must keep the right stock, right colors, right models. We invest behind brand, you would have seen during the IPL session, very good brand awareness. I respect all our competitors; each one has their own strategy. With retail financing coming in, there is greater opportunity to grow this segment. In India, I believe the category share will go up substantially. We need to learn from consumer requirements. Overall, it is a focused customer-driven approach of giving best-in-class attractive quality with feature technology and consistently delivering new products and refreshes. That is what has helped us grow ahead of the industry.

See, the inventory target is maximum 25 to 30 days with the dealers. That is the number we always give. Maybe during the season, 30 days because the hype and huge increases. So maybe at that time another four or five days more, but otherwise month after month we are always below 30 days. The optimum is we should not lose the retail. This has to be calibrated model wise and color wise. That is the way we work. Looking at overall this quarter, IB revenue is about 3,634 crores.

Commodity, the significant proportion has happened in Q1. There may be another marginal one because the war situation is up and down, especially on aluminum and some plastics and oil-related parts. This is something we have to closely watch. But we always focus on the top line, product mix, our journey. All this happened in one quarter. Even if you increase prices, it takes time to come back. We have taken about 1.5% in Q1. Progressively in Q2 we have looked at 0.5%. So it is a journey. We look from the customer point of view and appropriately price. It is very important that we continue the growth momentum. I am confident that a combination of product mix, growth, scale benefit, and cost reduction will help us in the EBITDA journey.

I am extremely happy that we have crossed 1 million and our hit rate is going month after month. I completely agree with you. Our contribution is becoming better and better quarter after quarter. I am confident that we will be a little patient and we will reach the contributions we are looking at as a company. Quarter after quarter, contribution is going up and the overall portfolio is yielding results. The direction is right.

PLI incentive number. Give me a minute. About 6.7% of the turnover.

See, Q2 is also going to be good in terms of growth. In my opinion, it could be slightly better than Q1. EV can keep the same momentum or slightly better. In terms of the overall year, I think this year is going to be extremely good. The only important thing to watch is Q3 because of El Niño and base effect. The GST benefits started coming at the end of September and the season is October, November. Looking from the consumer point of view, if the West Asia issues settle down, that will give much more confidence. LPG is available and prices are not growing as we think. Q2 will put a good base. Overall, the industry growth should be double digits.

I will be very strong, I can tell you. EV growth momentum will continue. You have seen EV penetration is 40% in three-wheelers and two-wheeler EV penetration in June alone was 10.6%. That is a good indication that consumers are considering EV in a big way.

Let me digest one by one. The EV total is about 1,780 crores, approximately. Second, on IB growth, definitely Africa, as I said last year, the worst is over. The base effect is over. There is a taxi market and the commuting class is growing with infrastructure. That is helping. The industry is growing significantly. Latam is also doing well. Asia is doing very well. We are present in every country with distributors and we are leveraging our product range. It is a combination of the market going up plus our product range.

I think last time I highlighted we are going for 8.3 million from the current capacity of 6.8 million. In three-wheelers, we are going from 2.5 million capacity to about 4.2 million. This is a big increase. We are investing around 3,500 crores for new products and capacity expansion, which will come over the next one to two quarters. By Q4 we will reach the 8.3 million capacity.

Commodity cost is about 3.5%. And maybe another 0.5% this quarter due to quarterly adjustments. So overall about 4%.

Lot of cross communication and noise. Can you repeat the question?

These are all transitions we have to embrace. For example, when electric penetration was not there, we went through a journey. Today BS6, new technologies, EV, flex fuel are green. We will look at how to give green vehicles for the future. That is the journey. We will embrace these changes as an industry and work on new technologies.

Products are ready now. We have started establishing. It is a combination of independent dealers and multibrand outlets in the premium category. First is UK in Europe, then US, and India is very important. We will look at getting the product range fully, with four products getting ready now. They will be positioned as super premium bikes. I believe in delighting the customer first, then growing the top line. Norton, the way TVS has taken ownership, I am confident it will delight customers first. Then we will achieve numbers through a clear plan. The most important part is getting the products and winning customer love. The feedback is very good.

Spare parts revenue. Give me a minute. Spare parts. It is 1,173 crores.

Brilliant question. Today the contribution from exports is about 26% of overall turnover, and this will grow. The reason is the product range we have from India and from PT TVS in Indonesia. We have the best range in the industry. Market by market, we are confident. We are investing in premium and super premium categories. Apache is very good. Ronin can be leveraged well. New products like RTR are country specific. On scooters, there are specific markets. HLX is growing fast. We are expanding capacity in Indonesia. We want to grow the 26% to much higher. We have started EV journey internationally with iQube and Orbi, and soon three-wheelers. Our strong distributors and focus on 3S capability: sales, service, spare parts. These strategies enable us to grow disproportionately. Africa is strong, Asia is strong. Now focus on Middle East and Latam. With Norton and super premium brands, we are entering developed markets.

I said it could be double digits in ICE. EV can be well above. Penetration is about 10.6%. Quarter after quarter this will strengthen. Growth can be very good this year.

On Norton, we are looking at certain segments. Atlas and Atlas GT are focused on superbike and adventure sport touring. We respect all competitors. There are many unique features starting from design. The most important thing is we look at the customer segment and give best-in-class performance. We are focusing on customer first, then establishing distribution network, creating awareness and consideration, investing behind brand because Norton is a super premium brand. That will translate into good volumes.

So far we have invested about 2,900 crores in the last four or five years.

Other expenses includes marketing, logistics, packing. In April there was a loss of production due to war situation and supplier parts availability. Conscious efforts were made to look at costs. In May and June production returned to normal. We have not reduced investment behind brand. As a percentage, I do not think you will see a marked difference going forward. Whenever a new product launch happens, costs go up due to launch costs. But in this quarter there was no launch.

Thank you. Can we go to the last question please?

These are all PLI. Many resources are once a year. We are confident all will come. I already told you about 6.7% related to PLI last year. The remaining are other export incentives.

No, I do not want to get into mathematics. There is no concern. Some are quarterly, some annual. PLI is annual.

Yeah, 600 crores is about PLI. That is the receivable.

100% 100%. Government has always supported. Absolutely nothing to worry about.

And finally, I just wanted to say you have seen Q1, we recorded highest revenue, EBITDA and PBT. With our unwavering focus on consumer quality, we will continue to grow ahead of the industry. TVS has the best range: Apache, Jupiter, Jupiter 125, iQube, Orbi, Raider, Norton, TVS King, Cargo. We will continue to leverage scale benefit, focus on premiumization, cost reduction. I am confident we will continue this journey on EBITDA and topline growth. Thanks to our customers for helping us cross 5 million HLX and 1 million iQube. I am confident Q2 will be a much better quarter than Q1. Thank you.