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Two-wheeler player TVS Motor Company’s shares sank four percent in trade on Tuesday, April 29, despite reporting a solid earnings show for the January-March period of FY2025. However, brokerages remained mixed on the outlook.

At 11.20 am, shares traded close to 3 percent lower on NSE, quoting Rs 2,712.5 apiece.

For the quarter ended March, TVS Motor reported a net profit of Rs 852 crore, nearly 76 percent from the Rs 485.43 crore net profit reported in the corresponding quarter of the previous financial year. The company's revenue from operations meanwhile surged 17 percent YoY to Rs 9,550 crore.

The jump in profit came despite ongoing challenges with its motorcycles segment. The company outperformed in the scooters category, however overall two-wheeler (2W) industry demand has softened after the festive season.

EBITDA margin stood at 12.5 percent, expanding 60 basis points sequentially and 120 basis points YoY, aided by the inclusion of PLI benefits. Margins for the quarter ended in March came in-line with brokerage estimates.

TVS is optimistic on the growth-front for the current financial year; The domestic two-wheeler (2W) industry is expected to continue growth to levels similar to the previous year, aided by a higher number of auspicious marriage dates in May and June, a forecast of normal monsoons, increased infrastructure spending, and a favorable base in Q4. Rural demand is also anticipated to remain steady.

While TVS Motor is expected to continue outperforming in the scooters segment, concerns regarding the underperformance of the motorcycle segment persist.

International markets remain a key growth pillar, with stable demand in Latin America and signs of recovery in key African regions, which are nearing the bottom of their economic cycles. Going ahead, HDFC Securities is optimistic on the international business front, considering that the business in its key African markets has bottomed out.

Choice Broking, however, downgraded the stock to 'add' considering the volatile global economic environment, including persistent inflation and elevated living costs, with a price target of Rs 2,920 per share.

"While TVS Motor Company is expected to continue outperforming in the scooters segment, its underperformance in the motorcycles segment remains a concern. Additionally, 2W industry demand has weakened following the festive season," said Motilal Oswal. The brokerage reiterated its 'neutral' tag, with a target price of Rs 2,720.

HDFC Securities maintained its 'add' rating, however, it said, "A concern remains for higher investments being made towards its subsidiaries, which includes investments for development of the Norton bike portfolio as well as e-bikes. We remain cautious on the product development of the Norton bikes as a shift towards the Euro 5+ norms could possibly lead to designing and costing challenges."

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