TVS Motor Company Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Chandramouli Muthiah - Goldman Sachs Financial, Inc. - Analyst : Congratulations on the favorable response to the Jupiter 110cc. First question is just product related. I think while Jupiter and Ntorq have had a good start to the festive season and good volumes for previous quarter, it appears that Raider 125 in the sports category seems to be moderating a little bit. So I just want to understand, is there any production-related issue there? Or are we considering sort of repositioning the product in light of recent competitor events?

Question: Chandramouli Muthiah - Goldman Sachs Financial, Inc. - Analyst : Got it. That's helpful. Second question is on just festive season comments you made earlier in the prepared remarks. I think you mentioned that so far industry festive volume growth on your estimates is 11%. But you also mentioned sort of 3Q volume growth, I think it was 4%. I just want to understand where there is a contrast between those two numbers. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 11:30AM, TVSM.NS - Q2 2025 TVS Motor Company Ltd Earnings Call

Question: Chandramouli Muthiah - Goldman Sachs Financial, Inc. - Analyst : Got it. That's helpful. Just lastly, a clarification on the export and the spares revenue for the quarter, please?

Question: Chandramouli Muthiah - Goldman Sachs Financial, Inc. - Analyst : That's right.

Question: Pramod Kumar - UBS - Analyst : First, just wanted some more details on the investments you're doing on the employee side. Because the reason why I asked that is like your employee cost is a good 25%, 26% higher than Bajaj and just around 10%, 15% lower than Hero. And then given the size of the company in terms of market share and revenue, it's a significant investment what you're doing the future. So -- and you alluded to that in terms of software, EV, other technologies. So if you can just help us understand how much of the current employee bill, I'm not asking -- is roughly targeting towards these advanced investments. And what's the kind of IP what we've built in within the organization? Because the choice is either to do it yourself or outsource it. So clearly, your intention seems to be doing everything in-house in terms of a lot of technology. So if you can just help us understand because all this will kind of pay out in the future in terms of benefits, right? So if you can just help us understand how much is the steady-state ongoing legacy business expenses or -- and what kind of investments which is going on the employee side? Yeah. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 11:30AM, TVSM.NS - Q2 2025 TVS Motor Company Ltd Earnings Call

Question: Pramod Kumar - UBS - Analyst : Sir, any quantification as to how much of the wage bill is towards the advanced investments or towards --

Question: Pramod Kumar - UBS - Analyst : Yeah. And sir, with the kind of investments which you're making which are way out of the industry, so are you -- you're still confident on maintaining the margin momentum going forward?

Question: Pramod Kumar - UBS - Analyst : Great to hear that. Sir, on Jupiter, I believe it's a very big hit currently, probably the only two wheeler model, which is waitlisted in the market. So what is the plan there to up the capacity, sir? Because I know we kind of take our own time to increase ramp-up of capacities, look at demand how it settles. But this clearly seems to be a standout product in terms of what's doing in the marketplace and what you're hearing from TVS and even the competition dealers. So what is the plan there on capacity? Where are we today on 110 capacity and where you expect it to be ramped-up in the near to medium term? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 11:30AM, TVSM.NS - Q2 2025 TVS Motor Company Ltd Earnings Call

Question: Pramod Kumar - UBS - Analyst : Fair enough, sir. The final question is on the subsidiary performance to Desikan sir as well and to you as well. If you can just share on the TVS Credit, is there anything which you received from RBI in terms of inquiry on the IRRs, what you're charging, because there have been some -- such moves with other NBFCs and there's a concern on that the interest rates will get capped. Anything if you can share there? And also in terms of the breakup of the book as to how much of the book is currently towards the auto loan, TVS products? And what's the broader classification of breakup of the loan book, sir? And any numbers on ROE, ROA, if you can share that? And finally, update on the European subsidiaries. How is the cost control there going? And what's the kind of reduction in losses what we are seeing there? And any investments which are expected which are not already kind of budgeted for? If you can share that color, sir. Thank you.

Question: Pramod Kumar - UBS - Analyst : And on Norton. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 11:30AM, TVSM.NS - Q2 2025 TVS Motor Company Ltd Earnings Call

Question: Pramod Kumar - UBS - Analyst : Fair enough, sir. Finally, EV revenues, have you shared it in the opening remarks, if I missed it.

Question: Pramod Kumar - UBS - Analyst : EV revenues, revenues from EV during the quarter.

Question: Pramod Kumar - UBS - Analyst : The revenue number, sir, is it handy?

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : A couple of questions from my side. One is you refer to -- you are seeing some challenges in the domestic market. Can you elaborate on that? What are the challenges that are visible on the ground currently in two-wheeler business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 11:30AM, TVSM.NS - Q2 2025 TVS Motor Company Ltd Earnings Call

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Okay. 7%, 8% is for FY25 or for the festive season?

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : 7%, 8% in third quarter?

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Yeah, it's very good growth rate. It's for the third quarter.

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Got it. Secondly, we have seen drop in our realization on a sequential basis. Is there any one-off to call out for that dop?

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Yeah. Undoubtedly. And staff cost increase on QoQ, you mentioned about software charges as investment for the future technology. But is there any ESOP related provisioning in this quarter or that will come in future quarters?

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Okay. Got it. And lastly, with respect to the e-bike business in Europe. So some of your peers have indicated severe stress in the e-bike businesses and they have undertaken impairment. How is our e-bike business doing? And do we need to take any impairment there?

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : The electric cycle business in Europe, some of your peers have indicated severe stress in the European business for e-cycles and they've taken impairment for e-cycle business in 2Q. So are we seeing similar stress on the ground? How is our e-cycle business doing? Do we need to take any impairment there?

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Yes.

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Fair point. And lastly, working capital in the first half was about INR838 crore. For the full year, we still maintain INR1,000 crore to INR1,100 crore of CapEx?

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : INR1,000 crore to INR1,100 crore is what you had indicated, but first half is already --

Question: Amyn Pirani - JPMorgan Chase & Co. - Analyst : Sir, my first question is on the recent refreshes that you have done on the Jupiter and the Radeon and the Raider. And like you mentioned, you are giving more value to the customer. With extra features, it looks like that in some variants, the prices are similar or maybe even slightly lower. So my question was that are you seeing some restraint from the customer in terms of the price points. And related question is that are you seeing any price competition in the market from other players in terms of headline discounts during this festive period?

Question: Amyn Pirani - JPMorgan Chase & Co. - Analyst : Sir, I'm very happy, but I'm just asking as to whether the -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 11:30AM, TVSM.NS - Q2 2025 TVS Motor Company Ltd Earnings Call

Question: Amyn Pirani - JPMorgan Chase & Co. - Analyst : Fair enough, sir. And sir, speaking of margins, I just wanted to get a sense as to like, is there a time line by when you think that you want to start recognizing the PLI. I mean, is there a certain milestone that you're looking for? And the reason -- any reason why you're not taking -- started to take it yet?

Question: Amyn Pirani - JPMorgan Chase & Co. - Analyst : Yes. And sir, lastly, on the EV side, just in terms of directionally, could you give some color on how are the gross margins or EBITDA margins or any period by which you expect EBITDA breakeven? Or how are the trends moving in terms of profitability? If you can give some color?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Just quickly, before I get to questions, I just wanted to recheck the numbers. The 4% growth that you mentioned earlier is for the entire -- since the beginning of the festive period, right? Is that understanding correct?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay. Got it. And 7% to 8% guide that you're giving is for the third quarter?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay. Got it. Okay. Just now moving to the questions. On the EV business, could you just talk -- give us a little bit more insights into how should we think about capacity ramp up? Because clearly, there's a lot of effort you are putting to put iQube to more dealerships. If you can give us a little bit update on capacity and how much touch points or dealerships we have covered in markets we have covered. And in continuation also, sir, if I remember, you've taken that call, you don't want to aggressively discount or participate in price discounting. But we have tactically started to do that in recent weeks. So I'm just trying to understand, is there any change in the strategy around the EV business? Are we okay to now complete from a pricing perspective also? So just more on how we are thinking about the business?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay. Got it. And maybe just very quickly on this. You said the dealership of 750. This is -- are we doing entirely exclusive or we are now -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 11:30AM, TVSM.NS - Q2 2025 TVS Motor Company Ltd Earnings Call

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay. Got it. And the other question around EVs was on the affordable EV launch that we've been talking about. Are we looking to do that in fiscal '25? Any timelines around that?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay. Got it. And just second question on the export market. Now clearly, there's been good pickup you've started to see in export front. If you can just give us a little bit color on how our geographic mix is, how much comes from Africa, LATAM, which is the geo mix, some color?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay. Sir, is it fair to assume Africa is 60%, 70% or even more of your entire volume mix?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Will Africa be more than 60%, 70% of the volumes that -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 11:30AM, TVSM.NS - Q2 2025 TVS Motor Company Ltd Earnings Call

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay. Got it. And lastly, sir, any comments on CNG portfolio? Is that something that we are now thinking to introduce to the market. And if we were -- what kind of timelines we are looking at?

Question: Mumuksh Mandlesha - Anand Rathi Institutional Equities - Analyst : Sir, you mentioned about the rural doing well, sir. Can you indicate how has been the rural market growth? And how is the urban market growth these last few months, sir?

Question: Mumuksh Mandlesha - Anand Rathi Institutional Equities - Analyst : Got it, sir. Sir, coming to exports, three-wheeler, sir, that has not yet seen a recovery like two wheeler, we have seen a recovery. Any reason for the slowness in the export three-wheeler market? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 11:30AM, TVSM.NS - Q2 2025 TVS Motor Company Ltd Earnings Call

Question: Mumuksh Mandlesha - Anand Rathi Institutional Equities - Analyst : But you see the recovery happening sequentially in the [export channel].

Question: Mumuksh Mandlesha - Anand Rathi Institutional Equities - Analyst : Perfect, sir. Just lastly on the this PLI incentives, sir. Just want to understand by when we will be starting booking these incentives, sir?

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : On the TVS Credit services, if you look at the segmented financials, we've seen -- reported a PBT degrowth. While in our commentary, we talked about PBT growth of, I think, close to 15%, 18%. So just trying to understand why is it this kind of?

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : So if you look at consol segmental numbers, you have reported around INR209 crore of segmental EBIT as against INR218 crore. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 11:30AM, TVSM.NS - Q2 2025 TVS Motor Company Ltd Earnings Call

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : Okay. I'll take this offline, if that's okay with you?

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : And in terms of the EV product portfolio and the PLI. So PLI, the cumulative amount, if you can just give some color, what kind of cumulative amount we'll be looking at once we have a policy in place? And second question is on the EVs. We were looking at a very aggressive launch pipeline. So I think a couple of quarters back, we were looking in next four to six quarters at that point in time to have a very aggressive launch pipeline. But somehow we're not seeing much launches from our side. So just trying to understand what is the thought process behind that?

Question: Viraj Kacharia - Securities Investment Management Pvt. Ltd. - Analyst : Okay. And the last question is on the investment and CapEx, if you can just give for the full year and FY26?