TVS Motor Company Limited — Q1 FY26 earnings call

Call held 31 Jul 2025

Management summary

TVS Motor Company reported a strong Q1 FY26, achieving its highest-ever revenue of ₹10,081 crores, driven by robust volume growth across segments and improved operating margins. While EV sales showed significant growth, the company acknowledged challenges related to magnet availability and a slower e-bike market in Europe. Management expressed confidence in continued growth ahead of the industry, supported by new product launches and strategic investments.

Highlights

  • Revenue reached an all-time high of ₹10,081 crores, marking a 20% YoY growth.

  • Operating EBITDA increased by 32% to ₹1,263 crores, with the margin expanding by 100 basis points to 12.5%.

  • Profit after tax (PAT) saw a significant 35% growth, reaching ₹779 crores.

  • EV two-wheeler sales volume surged by 35% to 70,000 units, and three-wheeler sales grew by 46% to 45,000 units.

  • TVS Credit's PBT grew 30% to ₹243 crores, with a book size of ₹26,900 crores.

Concerns

  • Challenges in the availability of magnets for EV production, requiring short-term mitigation and long-term actions.

  • Industry decline of 3% in two-wheeler ICE sales in Q1, with TVS domestic ICE sales growing only 8%.

  • Moderate growth expected in July, August, September for domestic ICE business due to some challenges in July.

  • E-bike business is currently slow due to the economy in Europe, though management expects future breakeven.

Key financials

  1. Revenue ₹10,081 Cr +20%YoY
  2. Operating EBITDA ₹1,263 Cr +32%YoY
  3. Operating EBITDA Margin 12.5%
  4. PBT ₹1,053 Cr +35%YoY
  5. PAT ₹779 Cr +35%YoY

What they filed

Q1 FY27: revenue up 33.5%, net profit up 64.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue11,302 11,035 11,542 12,210 14,051 +24%14,756 +34%15,053 +30%16,296 +33%
EBITDA1,624 1,633 1,904 1,803 2,110 +30%2,267 +39%2,172 +14%2,343 +30%
Net profit588 609 698 643 833 +42%891 +46%820 +17%1,058 +65%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Domestic ICE Two-Wheeler Sales
    8% Volume Growth
  • International Two-Wheeler Sales
    40% Volume Growth
  • Total ICE Two-Wheeler Sales
    16% Volume Growth
  • EV Two-Wheeler Sales
    70,000 units Volume35% Volume Growth₹1,000 Cr Revenue
  • Total Three-Wheeler Sales
    45,000 units Volume46% Volume Growth
  • TVS Credit
    ₹243 Cr PBT30% PBT Growth₹26,900 Cr Book Size
  • Exports
    ₹2,487 Cr Revenue
  • Spare Parts
    ₹987 Cr Revenue

Capital allocation

high confidence
  • Capex ₹1,600 Cr
    • Investments behind new products
    Capex will be about INR1,600 crores to INR1,700 crores, in that range, INR1,600 crores to INR1,650 crores, because there are many investments behind new products.
  • Debt Debt disclosed
    • New borrowing NCD funding to meet SEBI mandate for capital market funding for incremental borrowings.
  • M&A Norton Acquisition · Integrated

    Building a global super premium brand with multiple new products and retail strategy.

    40% of TVS Singapore investment (INR5,100 crores as of March '25) is in Norton.

    On Norton, all of you know that end of this financial year, we'll be launching products, multiple new products... predominantly, it is Norton. See, out of that, almost 40% of that is Norton.
  • M&A E-bike companies Acquisition · Integrated

    Consolidated all e-bike companies to one for productivity improvement and synergy in fixed costs.

    last year, we have consolidated all the e-bike companies to one, and we have looked at the organization also to combine into one so that there is overall productivity improvement, also the synergy in terms of the fixed cost.

Guidance & targets

Investment

  • Total Investment Investment · FY26 · High confidence INR2,000 crores
    I can tell you INR2,000 crores for this year, it will be there.

    — K. N. Radhakrishnan

Capex

  • Total Capex Capex · FY26 · High confidence INR1,600-1,700 crores
    Capex will be about INR1,600 crores to INR1,700 crores, in that range, INR1,600 crores to INR1,650 crores, because there are many investments behind new products.

    — K. N. Radhakrishnan

Product Launch

  • Norton new products Product Launch · end of this financial year (FY26) and Q1 next year (FY27) · High confidence multiple new products
    On Norton, all of you know that end of this financial year, we'll be launching products, multiple new products. And they will be available in the first quarter of next year to many markets in Europe, and this is as per plan. Norton will unveil this new generation super bike this year. And in the quarter -- first quarter next year -- last quarter of this year, you will see more models to be unveiled.

    — K. N. Radhakrishnan

Regulatory Benefit

  • PLI for EV 3-wheelers Regulatory Benefit · Q2 FY26 · High confidence start from next quarter
    PLI for 3-wheelers? Or would it start from next quarter? Next quarter.

    — K. N. Radhakrishnan

Market Position

  • Prominent space in EV 3-wheeler category Market Position · this year · Medium confidence prominent place
    I am pretty confident that we will reach a prominent place in this EV three-wheeler, this year.

    — K. N. Radhakrishnan

Profitability

  • EBITDA Margin Profitability · ongoing · Medium confidence continuously improve
    I'm very sure that we will continuously improve our EBITDA, and we will continuously grow ahead of the industry.

    — K. N. Radhakrishnan

Volume Growth

  • Domestic ICE Business Volume Growth · July, August, September (Q2 FY26) · Medium confidence moderate growth
    So, we are expecting a moderate growth in July, August, September.

    — K. N. Radhakrishnan

What to watch in Q2 FY26

Norton product launches

Q3/Q4 FY26 (this financial year) and Q1 FY27 (next financial year)
Current Final stages of product preparation
Target Multiple new products launched

Why it matters

Key to realizing returns on significant Norton investments and expanding the premium segment.

I think the Norton will have the products Q3 and Q4 of this year. And I'm very sure next year summer; you will see these products in Europe.

Risks & concerns

  • Magnet availability for EV production

    high

    Challenges in magnet availability for EVs require short-term mitigation and long-term actions like HRE-free technologies and alternate sourcing.

    Management acknowledged

  • Potential for over-rain and flood impacting rural economy

    medium

    While monsoon arrival is early and positive, excessive rain and floods could negatively impact the rural economy.

    Management acknowledged

  • Slowdown in e-bike sales due to European economy

    medium

    The e-bike business is currently slow due to economic conditions in Europe, though breakeven is expected in the medium term.

    Management acknowledged

  • Commodity price increase in Q2

    low

    Expected 0.5% increase in commodity prices, particularly steel, for Q2, to be mitigated by price increases, product mix, and cost reduction.

    Management acknowledged

Q&A highlights

6 direct
Rural growth dynamics and scooterization trends in ICE segment. Direct
In the ICE if you look at it, this quarter, the rural growth was only 3.3%, while the average is 4%, okay? And one of the reasons could be that this year, we have seen the monsoon a little bit early as well as the start of sowing, which is early, while this is definitely likely to do better for Q2 onwards.

Clarifies current rural growth, links it to monsoon, and indicates potential improvement in Q2, while noting scooterization is also rising in rural areas.

Asked by Binay Singh

Timeline for EV motorcycle/bicycle launch and impact of rare earth magnet restrictions. Partial
The cycle closer to the launch, I'll be able to give you more details. We are still working out all the details on that. On magnets, as you said, there are some challenges, but we are looking at various alternatives at this point of time.

Highlights ongoing challenges with magnet availability for EVs and the company's efforts to find alternatives, while deferring specific launch details for new EV products.

Asked by Binay Singh

Market share aspirations and margin expansion runway for the company. Direct
See, we always look at customer first. And what is most important is focus on the customer, delight the customer, give them the best products and technology... So I am pretty confident that going forward, we will be going ahead of the industry.

Management reiterates focus on customer delight and product range as drivers for outperforming the industry and margin improvement, without providing specific market share targets.

Asked by Pramod Kumar

Investments in Norton, product launch timeline, and strategy for cash flow generation. Direct
I think the Norton will have the products Q3 and Q4 of this year. And I'm very sure next year summer; you will see these products in Europe... On the investment side, on Norton, please understand the final stages of the product preparation is happening. But you need to have more products, please understand. The success of any company is based on not just one product.

Provides a timeline for Norton product launches (Q3/Q4 FY26, Q1 FY27) and clarifies the ongoing investment phase for developing multiple products.

Asked by Pramod Kumar

Rationale behind NCD funding. Direct
NCD funding, if you know that the SEBI has mandated the 25% based on the incremental (previous year's) borrowings has to be only in the form of a capital market funding. And therefore, the current year's requirements is being funded through this raise of NCD.

Explains that NCD funding is primarily to meet SEBI mandates for capital market funding for incremental borrowings, rather than for new specific large investments.

Asked by Kumar Rakesh

Premium distribution strategy and updates on ABS norms. Partial
See, we will have a differentiated retail strategy in India covering Norton, and possibly some of the premium TVS bikes. The work is going on... I think we will as of now, the discussions are going on. Appropriate decision once it comes, I'll be able to share you with more details.

Indicates a strategic shift towards a differentiated retail strategy for premium products including Norton, and ongoing discussions regarding ABS norms, which could impact costs and safety.

Asked by Gunjan

PLI eligibility for other EV products beyond current offerings. Direct
See, there are certain criteria. The timeline will depend upon when we need those criteria. So, we are already working on it. Progressively, it will cover all the products.

Confirms the company is working towards making more EV products eligible for PLI, which could enhance profitability for future EV launches.

Asked by Kapil Singh

Supply chain strategies for rare earth magnets for EVs. Direct
See, short term, we are managing with the stocks what we have. We also resized some higher-sized magnets, which are locally available. We are also exploring some alternate strategies in the short term... But if you look at on a medium- and a long-term basis, we are working on HRE-free, ferrite-based, magnet-free, and we are also looking at alternate countries.

Provides detailed short-term and long-term strategies to address magnet supply chain challenges, crucial for EV production continuity.

Asked by Abhinav Ganeshan

2 min read 6 chapters

Detailed narrative

Strong Q1 FY26 Performance Driven by Volume Growth and Margin Expansion

TVS Motor Company achieved its highest-ever revenue of ₹10,081 crores in Q1 FY26, marking a 20% year-on-year growth compared to ₹8,376 crores last year. Operating EBITDA increased by 32% to ₹1,263 crores from ₹960 crores, with the operating EBITDA margin expanding by 100 basis points to 12.5%. Profit after tax also grew significantly by 35% to ₹779 crores from ₹577 crores, reflecting sustained growth above the industry average.

Robust EV and Three-Wheeler Sales Outperform Market

The company's EV two-wheeler sales surged by 35% year-on-year, reaching 70,000 units in Q1 FY26, up from 52,000 units last year, with revenue around ₹1,000 crores. Total three-wheeler sales also saw a substantial 46% growth, totaling 45,000 units compared to 31,000 units last year. While domestic ICE two-wheeler sales grew by 8%, the international two-wheeler market experienced a 40% growth, significantly outpacing the industry's 23% growth.

Strategic Investments in Norton and EV Portfolio

TVS Motor is in the final stages of product preparation for its Norton brand, with multiple new products expected to launch in Q3 and Q4 of FY26, and in Europe by Q1 FY27. The company plans a total investment of approximately ₹2,000 crores for FY26, with capex estimated between ₹1,600-1,700 crores, primarily for new product development and marketing. These investments are aimed at strengthening its premium and EV offerings, with Norton representing about 40% of the TVS Singapore investment of ₹5,100 crores as of March '25.

Addressing EV Magnet Supply Chain Challenges

Management acknowledged ongoing challenges with the availability of rare earth magnets for EV production. In the short term, the company is managing with existing stocks, resizing higher-sized magnets, and exploring alternate strategies to maintain daily production. For the medium to long term, TVS is working on HRE-free, ferrite-based, and magnet-free technologies, alongside exploring alternate sourcing countries to build a more resilient supply chain.

TVS Credit Sustains Strong Growth

TVS Credit, the company's financing arm, reported a 30% growth in PBT, reaching ₹243 crores in Q1 FY26, up from ₹187 crores last year, with its book size expanding to ₹26,900 crores. The company disbursed loans to over 1.6 million new customers, expanding its total customer base to over 2 crores. This growth is driven by a focus on risk-calibrated expansion across product categories and enhanced customer experience.

Outlook for Domestic Market and Regulatory Benefits

The company anticipates moderate growth in the domestic ICE business for Q2 FY26 (July, August, September), supported by an early monsoon and improved rural sentiment. Additionally, TVS expects to start accruing PLI benefits for its EV three-wheelers from the next quarter (Q2 FY26), which will contribute to the segment's profitability. Discussions are also ongoing regarding ABS norms, with management prioritizing rider safety.

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