Analyst Concall
TVS Motor plans INR 16.0 bln-INR 16.5 bln capex for FY26
This story was originally published at 19:15 IST on 31 July 2025
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--TVS Motor: Expect moderate growth in Jul-Sept
--CONTEXT: Comments by TVS Motor's mgmt in post-earnings conference call
--Trying to mitigate rare earth magnet challenges in long term
--Optimistic about beating industry growth in Jul-Sept
--Growth in rural areas in Apr-Jun below industry average
--Demand for scooters improving in rural areas
--Urban-rural mix in line with industry
--Expect PLI scheme for 3-wheeler EVs from Jun
--See investment in FY26 at around INR 20 bln
--See FY26 capex at around INR 16.0 bln-INR 16.5 bln
--Looking for heavy rare earth-free magnets to overcome challenges
MUMBAI – TVS Motor Co. Ltd plans a capital expenditure of around INR 16.0 billion-INR 16.5 billion in 2025-26 (Apr-Mar) with an estimated investment plan of around INR 20 billion, the company's management said in its post-earnings conference call. The company is looking forward to invest aggressively in new products and technologies to drive its top line growth.
The company reported a slightly higher-than-expected bottom line of INR 7.79 billion for the June quarter. The net profit rose nearly 35% on year but fell around 9% on quarter. Its top line during the quarter rose over 20% on year and nearly 6% on quarter. The company has posted an on-year rise in its earnings before interest, taxes, depreciation, and amortisation, as well as in its EBITDA margin for the quarter.
The company is investing largely towards sustaining the operating losses incurred in its various categories. The company has increased its stake in TVS Supply Chain Solutions to 5.3%. Going ahead, TVS Motor plans to invest more in TVS Supply Chain Solutions, expecting its stake to rise to 6-7%, the company's management said.
Earlier in June, the Chinese government had abruptly halted exports of rare-earth magnets to all countries from Apr. 4. Analysts had predicted this to have an impact on automobile companies' production in May or June. Owing to this disruption in supply of rare earth magnets, TVS Motor plans to scout for alternative for a long run. However, the company is using magnets from their stock to manage the supply-chain issue in daily production.
Currently, it is also using some higher-sized magnets, which are locally available, and is exploring some alternate strategies in the short term, the management said. On a medium- and long-term basis, the motorcycle manufacturer is also working on heavy rare earth magnets, ferrite magnets, and magnet-free options. It is also looking for alternative countries to import these magnets.
The motorcycle maker expects to have moderate growth in its internal combustion engine business in Jul-Sept. It has registered 4% on-year growth in this segment for the June quarter. The growth in the rural ICE (internal combustion engines) business was slightly lower than that in the urban market during this quarter.
An early onset of the monsoon, which lead to an early start of the sowing period, and the above-normal rainfall this year has supported the rural economy, and going ahead, it is expected to help boost the growth in the ICE segment, the company's management said. During Apr-Jun, this segment reported an on-year growth of 3.3%, below the average of 4%.
The improvement in rural infrastructure is seen supporting the rise in the proportion of scooters in rural areas, the management said. TVS Motor believes the product mix in rural and urban areas is in line with the industry and anticipates to outperform industry growth in Jul-Sept.
The company expects to get the production-linked incentive scheme for three-wheeler electric vehicles from June onwards. It expects to receive the incentive shortly, TVS Motor management said. The company sold about 70,000 electric vehicles in the June quarter and generated a revenue of around INR 10 billion from this. Additionally, the company said it has received the production-linked incentive of 0.5% of the overall revenue.
The company reported its June quarter earnings during market hours Thursday. After the results, the stock rose sharply to its intraday high but came off highs and closed up 0.3% on the National Stock Exchange. End
Edited by Tanima Banerjee
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