TVS Motor Hits 52-Week High As UBS Ups Price Target On EV Push


Shares of TVS Motor Co. Ltd. hit a 52-week high after UBS Securities India Pvt. hiked target price in anticipation of the Chennai-based automaker emerging as a leader in the electric two-wheeler space.

“We are now more convinced that TVS will emerge as a market leader in EVs over the medium to long term, given the response to the iQube and a best-in-class EV launch pipeline,” the brokerage said in its investor note dated Oct. 17.

Shares of TVS Motor jumped 3.25%, the most in nearly a week since Oct.12, to a 52-week high of Rs 1,109.95 apiece. Trading volume is more than three times the 30-day average.

Of the 49 analysts tracking the company, 30 maintain a ‘buy’, 11 suggest a ‘hold’, and eight recommend a ‘sell’. The 12-month consensus price target implies a downside of 12.1%.

UBS Securities India On TVS Motor:

  • UBS sees TVS as a “potential leader in EVs” due to its strong R&D, customer focus, and lead in EV technology relative to peers.

  • “EVs level the field for TVS’ scale disadvantage versus larger peers in the ICE portfolio,” the brokerage said.

  • UBS expects TVS to gain a 25% market share in EVs by FY30, while its share of two-wheelers will rise to over 18% from 14% currently.

  • The brokerage expects the two- and three-wheeler maker to roll out five electric vehicles over the next 12-15 months to drive upside to consensus volume estimates.

  • TVS will also start supplying premium electric vehicles to BMW Motorrad, the motorcycle brand of BMW, for its global requirements, the brokerage said.

  • These launches, UBS added, could also act as a precursor for the monetization of the EV arm in the near term.

  • The brokerage kept a ‘buy’ rating on the stock and raised the 12-month target to Rs 1,385 from Rs 1,100, implying a potential upside of 28.4%.

  • “While larger peers are going slow on EVs as it is a loss making product currently, TVS is ramping up rapidly with plans for 25,000 per month unit capacity by end-FY23,” it said.

  • The brokerage raised its FY23,FY24,FY25 EV volume estimates to 75,000 units, 180,000 units and 300,000 units from its earlier projection of 65,000 units, 130,000 units and 250,000 units, respectively. Highlighting concerns of cannibalisation of internal combustion engine models with EVs along with stronger demand, UBS also raised ICE scooter estimates.

  • The brokerage expects TVS to continue gaining market share in domestic ICE and export markets.

  • The brokerage predicted Ebitda margins of 10.7%, 12%, 12.4%, respectively, for FY23, FY24, FY25, led by improving profitability of the internal combustion engine portfolio and scale benefits in EVs.

  • Meanwhile, margins may see a 100-150 basis points dip in the medium term from EV segment.

  • UBS flagged the stock as inexpensive, adding that the street is not fully pricing in the success of its new launches, strong ramp up in EV volumes and ASP and margin expansion on portfolio premiumisation.


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