TVS Motor Company Limited Q1 FY27 Earnings Call Summary

Event Participants

Executives

2 K. Gopala Desikan, K.N. Radhakrishnan

Analysts

10 Amit Hiranandani (PhillipCapital), Arvind Sharma (Citibank), Binay (Morgan Stanley), Chandramouli Muthiah (Goldman Sachs), Deep Vakil, Gunjan Prithyani (Bank of America), Kapil Singh (Nomura), Nitin Arora (Axis Mutual Fund), Pramod Amthe (InCred Capital), Pramod Kumar (UBS Securities)

Financials & KPIs

Geographic & Segment Commentary

• Domestic 2W (ICE): Sales grew 21% YoY against industry growth of 13%, driven by a strong scooter portfolio (Scooty, Jupiter 110/125, Ntorq 125/150) and premium motorcycle demand (Apache, Ronin); dealer inventory maintained below 30 days to protect retail pull.
• International Business: Record 4.68 lakh units (+33% YoY) with revenue of ₹3,634 crores; Africa remains the key driver on HLX demand - HLX crossed 5 million cumulative sales with the last 1 million added in just 12 months; LATAM and Asia growing ahead of industry; capacity investment underway as demand exceeds supply.
• EV Segment: 2W EV sales of ~130,000 units (+86% YoY); iQube crossed 1 million cumulative customers; June 2W EV penetration at 10.6% and 3W EV penetration crossed 40% for the first time; EV revenue ~₹1,780 crores; adoption expanding from urban to semi-urban and rural markets.
• 3-Wheeler: 67,000 units (+48% YoY); EV penetration crossed 40%; strategic partnership with IOC for LPG cylinder distribution cargo solutions; capacity expanding from 20,000 to 30,000 units.
• TVS Credit: Book size grew 19% to ₹32,053 crores with PBT of ₹283 crores (+16%); disbursed loans to 14 lakh new customers in Q1 (total customer base ~2.6 crores); network expanded to ~62,000 touch points; continued investments in AI and data analytics for risk assessment and operational efficiency.

Company-Specific & Strategic Commentary

• Norton Motorcycles: Manx, Manx R, Atlas and Atlas GT launched in UK, France, Italy, Germany, Spain and India, with US rollout later in CY26; Manx production at Solihull and Atlas at Hosur; cumulative investment of ~₹2,000-2,500 crores over 4-5 years; positioned across superbike, naked/sport and adventure-touring segments.
• Premiumization & Brand Building: TVS Paddock premium bespoke experience channel announced for India; Apache 160 4V launched in additional international markets; Ronin Monotone and Agonda variants rolled out globally; Raider introduced in Egypt; King EV MAX launched in Nepal.
• Capacity Expansion: 2W capacity from 6.8 million to 8.3 million by Q4 FY27; 3W from 0.25 million to 0.42 million; EV 2W capacity from 40,000 to 50,000+ and EV 3W from 20,000 to 30,000; ~₹3,500 crores investment covering new products and capacity.
• Cost & Pricing Management: Commodity cost inflation of ~3.5% in Q1 (plus ~0.5% expected in Q2) from West Asia conflict on steel, aluminium and oil-linked inputs; mitigated via 1.5% price increase in Q1 and planned ~0.5% in Q2; cost reduction and scale benefits to continue.
• Credit Rating Upgrade: CARE upgraded long-term facility rating to CARE AAA from AA+, reflecting consistent performance and strengthening ability to invest for long-term growth.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

EV Capacity Ramp-Up and Demand Insights

• Question: Current EV capacity, ramp-up plans over next 1-2 years, and consumer insights behind accelerating EV adoption (Nitin Arora, Axis Mutual Fund)
• Answer: EV 2W capacity moving from 40,000 to 50,000+; EV 3W from 20,000 to 30,000; capacity steps take 3-4 months, so expansion is manageable. Adoption is shifting from urban to semi-urban and progressively rural; "common man" customers and even motorcycle buyers are moving to iQube scooters. (K.N. Radhakrishnan)

Scooter Franchise, Competitive Discounting and Inventory

• Question: How is TVS gaining scooter share despite a major rival's discounting spree, and what inventory position is needed for festive demand? (Pramod Kumar, UBS Securities)
• Answer: Full scooter range (Scooty, Jupiter 110/125, Ntorq 125/150) is carefully segment-positioned with constant feature upgrades, best-in-class durability and top JD Power scores; scooter category is now ~40% of India's 2W market (ICE+EV) and will grow. Inventory target is 25-30 days, rising to ~35 days during Dhanteras; Q1 international revenue is ₹3,634 crores. (K.N. Radhakrishnan)

Commodity Headwind and Margin Path

• Question: Is the worst of the commodity headwind already in Q1 margins? (Binay, Morgan Stanley)
• Answer: Significant proportion of commodity increase hit in Q1; a marginal addition is expected in Q2 on aluminium and oil-linked plastics. Company took 1.5% price increase in Q1 and plans ~0.5% in Q2; product mix, growth scale and a strong cost reduction team will support the EBITDA journey. (K.N. Radhakrishnan)

EV Profitability and PLI Incentive

• Question: Is EV profitability improving toward ICE levels, and what is the PLI number? (Binay, Morgan Stanley)
• Answer: EV contribution is improving "quarter after quarter" with rising iQube volumes; the company is being patient on reaching target contribution levels but the direction is right. PLI incentive is ~0.6-0.7% of turnover. (K.N. Radhakrishnan)

Q2 and Full-Year Growth Outlook; Export Drivers

• Question: Should we model 20-30% growth continuing in Q2, and how to think about the full year? (Gunjan Prithyani, Bank of America)
• Answer: Q2 ICE growth should be slightly better than Q1, EV same or better; FY27 industry growth will be double-digit. Q3 needs watching - El Nino, base effect, and GST benefits that started end-September last year; festive season is October-November this year. EV revenue ~₹1,780 crores. Africa has recovered from its trough (taxi and commuter demand), LATAM and Asia growing ahead of industry; multi-product expansion (HLX, RTR, Raider) is driving growth. (K.N. Radhakrishnan)

Overall Capacity Expansion Details

• Question: Current capacity and expansion plan? (Kapil Singh, Nomura)
• Answer: 2W from 6.8 million to 8.3 million; 3W from 0.25 million to 0.42 million; ₹3,500 crores capex including new products; 8.3 million capacity reached by Q4 FY27. Commodity cost increase ~3.5% in Q1 plus ~0.5% in Q2 (4% total). (K.N. Radhakrishnan)

Delhi EV Policy and Norton Go-to-Market

• Question: How is TVS thinking about the draft Delhi EV policy (banning ICE 2Ws from CY2028), and what is Norton's distribution strategy? (Chandramouli Muthiah, Goldman Sachs)
• Answer: The industry will embrace the transition - BS6, EV and flex-fuel are all green technologies; company will work on new technologies. Norton will use a combination of independent dealers and multi-brand outlets in the premium segment, with first priority on UK, Europe, US and India; spares revenue ₹1,173 crores. (K.N. Radhakrishnan)

Long-Term Export Ambition and Growth Drivers

• Question: How will exports evolve over the next 5 years with FTAs, and which products/segments will drive it? (Amit Hiranandani, PhillipCapital)
• Answer: Exports are ~26% of turnover and will grow to "much, much higher" levels; product range from India and PT TVS Indonesia is the best in the industry (HLX 100/125/150, Apache, Ronin, Raider, Skubek/Bebek); focus markets are Middle East and LATAM; 3S strategy (sales, service, spare parts) underpins disproportionate international growth. Full-year domestic guidance: double-digit ICE industry growth, EV "well above". (K.N. Radhakrishnan)

Norton Positioning, Investment and Other Expenses

• Question: Norton target segment/competitors and cumulative investment; what drove the decline in other expenses? (Arvind Sharma, Citibank)
• Answer: Manx/Manx R target superbike and naked/sport segments; Atlas/Atlas GT target adventure/sport touring; unique design and technology; ~₹2,000-2,500 crores invested over last 4-5 years. Other expenses decline: April production loss from supply chain disruption and no launches in Q1; not a sustainable run-rate as launch costs will return with future launches. (K.N. Radhakrishnan)

PLI and Export Incentive Receivables

• Question: What is the split of ~₹1,100 crores incentives between PLI and export incentives, and the status of pending receivables? (Pramod Amthe, InCred Capital)
• Answer: PLI is ~0.6-0.7% of turnover; ~₹600 crores of the receivable is PLI, paid annually; management is 100% confident of collection - "government has always supported". (K.N. Radhakrishnan)

Key Takeaway

TVS Motor delivered record Q1 FY27 results - revenue of ₹13,896 crores (+38% YoY), highest-ever operating EBITDA of ₹1,779 crores (+41%; margin 12.8%, +30 bps) and PAT of ₹1,174 crores (+51%) - on total volumes of 1.63 million units (+28%). Domestic 2W ICE grew 21% versus the industry's 13%, international business hit a record 4.68 lakh units (+33%; revenue ₹3,634 crores), and EV volumes rose 86% to ~130,000 units, with iQube crossing 1 million cumulative and 3W EV penetration topping 40%. Management guided to double-digit industry growth in Q2 and FY27 with TVS outperforming, supported by ₹3,500 crores capex lifting 2W capacity to 8.3 million by Q4 FY27, four Norton model launches across Europe, India and the US, and TVS Credit book growth of 19%. Watch points include ~4% commodity cost inflation requiring further price hikes, Q3 base effects from last year's GST rationalization, monsoon progression and the draft Delhi EV policy proposing an ICE 2W ban from CY2028.