TVS Motor Company Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from TVS Motor Company Ltd (TVSMOTOR) Q3 FY22 Earnings Concall

Management Update:

• TVSMOTOR reported the highest EBITDA of INR568 crore, up by 11% YoY. Also, the company registered highest ever PBT of INR391 crores which grew by 8% YoY.

Q&A Highlights:

• Kapil Singh from Nomura asked about the percentage of improvement in ASPs QonQ. K N Radhakrishnan CEO said that the price increases the company has taken over 3Q21 to 3Q22 is almost 5%. Looking at 2Q22 to 3Q22 it’s almost 1.5%.

• Kapil Singh from Nomura asked about auto component seeing a loss increasing in 3Q22 compared to 3Q21 and 2Q22. K N Radhakrishnan CEO said that the business has just started, and the company is confident that next year, this will also start becoming positive.

• Binay Singh from Morgan Stanley asked about the export run rate from current levels. K N Radhakrishnan CEO said that export markets are doing well and the industry will continue to do well. But good thing is many of these markets, the penetration levels are very low.

• Sonal Gupta from L&T Investment asked about the other operating income for 3Q22. K N Radhakrishnan CEO replied that absolute numbers would be around INR60 crores odd. There is nothing new and these are all normal. There is no one-off in that.

• Amyn Pirani from JPMorgan Chase asked about the EV three wheelers and the timeline for that. K N Radhakrishnan CEO said that this is to the government agency, which is CESL Convergence Energy Services Limited, where the company has an order book of 2,000. Closer to launch, TVSMOTOR will give more details.

• Amyn Pirani from JPMorgan Chase asked about the 10,000 EV 2-wheeler capacity by 1Q23, which is per month capacity that the company intend to deliver by 1Q23. K N Radhakrishnan CEO said that the company has capacity today but the challenge is working very closely with the semiconductor suppliers. In 1Q23, TVSMOTOR is confident it will definitely be going 10,000. And beyond that, there are greater aspirations and plans with the product portfolio of launches.

• Nitin Arora from Axis Mutual Fund enquired about ASPs, what led to such increase quarter-on-quarter of the price hike in the export market. K N Radhakrishnan CEO said in exports also cost increases in raw material and the recent cost increases in aluminum caused price increases.

• Nitin Arora from Axis Mutual Fund asked about electric market share strategy . K N Radhakrishnan CEO replied that electrification definitely is the company’s strategy and focus. TVSMOTOR’s hypothesis is more electrification coming in the scooter category, because it has got a lot of convenience. And Scooter as a category, the proportion will expand.

• Prateek Poddar from Nippon Mutual Fund asked about e-bike segment in Europe and why the company has gone after it. K N Radhakrishnan CEO said that in Europe, this is one segment which is growing very fast. The CAGR has been 18%, and e-bicycles also there is significant growth potential.

• Jinesh Gandhi from Motilal Oswal asked about CapEx for FY ’22 and ‘23. K N Radhakrishnan CEO replied that for FY23 the company is in the workout. For FY22 it will be around INR750 crores, including EV.