TVS Motor Company Ltd Q4 2025 Earnings Call Transcript

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

Question: Binay Singh - Morgan Stanley - Analyst : my first question is what exactly is the PLI benefit that we have in the fourth quarter margin? Like we understand 12.5% will include PLI for that quarter. So how much is that?

Question: Binay Singh - Morgan Stanley - Analyst : Okay. So even -- so it means that even adjusted for that, you've seen some bit of a margin improvement. And sir, secondly, like one sort of a more longer-term question. One change that we've seen in last year is that the scooter growth, including electric vehicle has almost been twice of motorcycle growth at the industry level. How do you see this trend in your view? What is driving that? And do you see this continuing? I'm happy to hear your thoughts. That's it.

Question: Binay Singh - Morgan Stanley - Analyst : Right. So sir, in that sense, when you look at the market like Indonesia, we have a very wide range of scooter models, right, a wide range of CC, vehicle weight and all. So when you plan your product in the future, you are also sort of thinking in that direction.

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : My first question is just a follow-up on the PLI scheme incentives that you have put this quarter. So I just want to understand what percentage of our EV scooter portfolio are we currently accruing these incentives on? Is it on the entire portfolio? . You mentioned there's 2, 3 and 5-kilowatt hours. So I just want to understand which products there have qualified? And also if you could just share what the split within electric two-wheeler portfolio is percentage choice between the 2, 3 and 5-kilowatt hour products?

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : Got it. That's helpful. My second question is just around product launches. So I think historically, we have targeted to do one product launch per quarter and you mentioned in your opening remarks that many of your EVs are in the final stages of development. So just going forward, the next sort of 12 to 18 months, if you could give us some clarity on is this sort of similar run rate of one product launch per quarter? And just heading into this whole stimulus period, lower interest rates, more favorable income tax rates for customers. What is the sort of cadence to expect in terms of product launches as you plan for the next couple of years?

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : Got it. That's helpful. And just my last question is around your view of two-wheeler industry growth in India next year. Sir, you mentioned that you think that you will have different bases for different quarters. But I just want to understand, overall, how you're thinking about two-wheeler industry volume growth for FY26? And also just if you could share the export and the spares revenue for the quarter, please.

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : Correct. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2025 / 11:00AM, TVSM.NS - Q4 2025 TVS Motor Company Ltd Earnings Call

Question: Pramod Kumar - UBS - Analyst : Sir, my first question is on the PLI only. Before I ask the question, I just wanted the number on revenue side for fourth quarter, excluding the PLI incentive for the previous quarter, sir, you shared a margin 12.5% for the quarter, recurring margin. So if you can just share what is the recurring revenue run rate for 4Q without the PLI incentive for the previous quarter, sir?

Question: Pramod Kumar - UBS - Analyst : No. I'm looking for the previous quarter PLI incentives, sir. So okay, let me put it this way. Is that revenue for this quarter, including PLI is INR9,412 crore, is that understanding right? You can give the response to this during the course of the call, if you want to have a look at the numbers, that's okay. Is it fine, sir? Can I move to the question on PLI.

Question: Pramod Kumar - UBS - Analyst : INR9,000 crore.

Question: Pramod Kumar - UBS - Analyst : Sir, my question is on the incentive side because there's a domestic value-add hurdle, which you need to meet and then the incentives need to be clear. Sorry. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2025 / 11:00AM, TVSM.NS - Q4 2025 TVS Motor Company Ltd Earnings Call

Question: Pramod Kumar - UBS - Analyst : Yes. which is fine, sir.

Question: Pramod Kumar - UBS - Analyst : Yes. Perfect, sir. Okay. I understand that. My question is that do we see more headroom for PLI incentives improving as we improve our domestic value-added quotient of the products do more localization, ramp up the scale and sourcing. So how should one look at PLI incentive from the 4Q levels when you look at the next two years, sir?

Question: Pramod Kumar - UBS - Analyst : Okay. So in nutshell, you expect the PLI incentives to continue to keep getting better from here on? Is that understanding right, sir?

Question: Pramod Kumar - UBS - Analyst : Okay. No, that's good to hear. Sir, on the e-three-wheeler side, because I just looked at the numbers, you are actually practically closing on Piaggio on the e-three-wheeler volumes pan India. So if you can just help us understand where are we on the network side because Piaggio, Mahindra, Bajaj have been in this market for a while and you entered this market only recently. So if you can just help us understand the journey so far, how has been the customer acceptance? How many markets you're present and in those addressable markets where you're present, how will be the market share ramp up? Because you're kind of nudging the number -- getting to 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. APRIL 28, 2025 / 11:00AM, TVSM.NS - Q4 2025 TVS Motor Company Ltd Earnings Call number three position now? And how big the opportunity could be, say, one or two years down the line? And also, what are the product launches

Question: Pramod Kumar - UBS - Analyst : Sir, if you can quantify network, how much of the addressable market you covered, how much is the potential? Just like you said, iQube is there in only 900 outlets, got an investment INR3,000, INR4,000-plus. Yes.

Question: Pramod Kumar - UBS - Analyst : Last question to Desikan, sir. Employee costs and other expenses have grown by 23% and 26% in FY25, our revenue growth is 14%. So there's been absolutely no operating. There's an operating deleverage because of the accelerated investments, what you're doing on R&D and technology and all that. So if you can just help us understand how do you see this cadence in FY26? Will there be because -- mind you, there's not only an FY25, that's been the case for the last three, four years now, but there's been no operating leverage. Everything the margin execution has happened from portfolio level and gross margin improvement and the kind of success we found with the products. So can we expect FY26, you will see some operating leverage coming back to the business because of all the investments that you've already done?

Question: Pramod Kumar - UBS - Analyst : That's not my line. That's for sure. I mean I'm room alone. There's no one. Sorry. Yes, sure.

Question: Pramod Kumar - UBS - Analyst : Sorry, my line was muted by the way. So just --

Question: Pramod Kumar - UBS - Analyst : So I think not a problem, sir. you can let Desikan sir answer this question. I'll drop out of the queue just in case if it helps. So I look forward to the response on that. Thank you, sir. I wish you all the best.

Question: Pramod Kumar - UBS - Analyst : No problem, sir. He can answer in the due course of the call.

Question: Gunjan Prithyani - BofA Global Research - Analyst : Just a quick clarification on your prior comments. Like can you give the EV revenues for the quarter and the year fiscal '25? And also, you mentioned somewhere that financing probably has tightened a bit. If you can like sort of share what does it mean for our portfolio? Have you seen some change in -- or how much is the portfolio which is financed in quarter four? Has there been any letdown on 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. APRIL 28, 2025 / 11:00AM, TVSM.NS - Q4 2025 TVS Motor Company Ltd Earnings Call

Question: Gunjan Prithyani - BofA Global Research - Analyst : And sir, EV revenues, if you can share --

Question: Gunjan Prithyani - BofA Global Research - Analyst : And the quarter?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay. And sir, just a second question I have is on a lot of items that you've mentioned in terms of dividend income from subsidiary mark-to-market. Can you give us a little bit color on what is -- where this dividend income is from? Where are we seeing this fair valuation losses? And again, the investments that we've made in this quarter, around INR600 crore, where has that gone. Some color on all these the regarding the subsidiaries?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Yes. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2025 / 11:00AM, TVSM.NS - Q4 2025 TVS Motor Company Ltd Earnings Call

Question: Gunjan Prithyani - BofA Global Research - Analyst : So sir, INR2,000 crore odd is that going to be the basis of investments in fiscal '26 as well? Or any change there?

Question: Vipul Agrawal - HSBC - Analyst : This is about the CNG scooters. Please let me if I'm wrong there, getting right stock at incremental rate is a challenge what we are seeing in the CNG two-wheelers. So typically, motorcycles are used to carry more weight than scooters. So will it be fair to assume that CNG tech is more suitable for scooters than motorcycles?

Question: Vipul Agrawal - HSBC - Analyst : Sir, I'm trying to understand like, for example, in rural India, we typically see two to three people sit on our motorcycle. So the weight becomes almost 200 kg or 220 kgs per vehicle. So I think over the incremental top to carry bag weight become reduces significantly in a CNG motorcycle rather than a petrol motorcycle. So typically in a scooter, you normally one or two people will sit at max. So I'm trying to understand that if CNG is a case more for like one or two person being driving the vehicle? Or can it carry like three people weight as well like with typical requirement of our rural 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. APRIL 28, 2025 / 11:00AM, TVSM.NS - Q4 2025 TVS Motor Company Ltd Earnings Call

Question: Vipul Agrawal - HSBC - Analyst : Just one more question, if I can take on exports. You touched up on Africa on your initial comments. Your exposure just to a couple of countries like your exposure to Guinea, Tanzania and Congo was relatively higher in your portfolio. So if you can talk a bit about like economic growth drivers in those countries? And what are the key models being sold over like it's like midsize, mid variant or the small cheap range being sold over there?

Question: Vipul Agrawal - HSBC - Analyst : Actually, I was talking more of economic growth drivers for this like for Nigeria, it's crude. So are any different economic drivers, growth drivers for these countries? Or how would it work like it?

Question: Sonal Gupta - HSBC - Analyst : Just on the -- I mean like just going back to CapEx and investment in subsidiaries. So we've seen a big jump in CapEx. I'm just talking standalone numbers. So INR1,800 crore of CapEx versus, say, roughly INR1,100 crore last year. So could you sort of give us some more detail into where is this investment spend going? Is there some capacity expansion as well? I mean, just -- and how do you expect this for next year?

Question: Sonal Gupta - HSBC - Analyst : Right. Because in the past, we have said that we will look to internalize or localize -- I mean internalize some of the EV components. So is there a lot of investment related to that in this number?

Question: Sonal Gupta - HSBC - Analyst : Right. Because I mean, the way to look at it, if I look at combined, right, like because a lot of our investments, which is going into subsidiaries also -- I mean, other than Norton is really and TVS Credit is really, again, technology for the company itself, right, on an overall basis. So I mean, like last year, we actually spent about INR2,450 crore if I include subsidiary investments and that is including whatever is put into TVS Credit and Norton and that number has gone to almost INR4,000 crore this year. So there is a substantial jump. So I'm just trying to understand, right, like that the pace at which we are investing and how are we -- I mean, it seems a very large number. Could you sort of highlight how much TVS Credit this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2025 / 11:00AM, TVSM.NS - Q4 2025 TVS Motor Company Ltd Earnings Call

Question: Sonal Gupta - HSBC - Analyst : Okay. No, basically, where I'm coming from is that your EBITDA is effectively, if I take the fact that tax payment as well, right? Like you're not generating any free cash flow. So I mean, after your investment in subsidiaries and CapEx, so that's where I'm coming from. But anyways, I will take it more off-line.

Question: Sonal Gupta - HSBC - Analyst : Sure, sir. No. That point is well taken. But if you could just later on clarify how much has gone into TVS Credit and Norton, that will be helpful.

Question: Sonal Gupta - HSBC - Analyst : That is an annual number, right?

Question: Amyn Pirani - JPMorgan - Analyst : Sir, my first question is on the motorcycles. This year, we've seen some moderation in the growth of the Raider. We had a refresh. So any plans of any product in the 125 cc or any plans on the Raider or any other launch that we should look forward to for motorcycles as a whole?

Question: Amyn Pirani - JPMorgan - Analyst : Understood, sir. And sir, just on the investments, one clarification. This quarter also, I think there is some investment in TVS supply chain. So I mean, we understand the investment in the subsidiaries and all those things. But in TVS supply chain, I just want to understand the rationale for this investors we've already had some investments, and I think we are doing further investment in that as well.

Question: Amyn Pirani - JPMorgan - Analyst : Okay. But I'm guessing that supply chain is more of a financial investment, right? Because, I mean, unlike your other subsidiaries, you only have a small stake.

Question: Kumar Rakesh - BNP Paribas - Analyst : My question was around TVS Credit. So while you spoke about the PBT growth and the general trend, can you speak about the credit quality, how that has moved sequentially in terms of NPA, GNPA, credit cost and that you can share on that?

Question: Kumar Rakesh - BNP Paribas - Analyst : Clear.

Question: Kumar Rakesh - BNP Paribas - Analyst : Okay. And on the subsidiary losses, so what drove this quarter? And how do you see that panning out in FY26 now that you spoke about that not in should have a product by the end of this year. So how would you be expecting the subsidiaries as a whole to perform in FY26?

Question: Kumar Rakesh - BNP Paribas - Analyst : Great. Just a clarification. We have not taken any write-off in any of the European investments that we have made or do not see that to be happening in this year, right?

Question: Pramod Amthe - InCredit Equities - Analyst : Sir, the first question is with regard to the industry subsegment. Considering that you are the largest listed player in this quarter. Can you give some clarity in terms of what a rural versus urban mix now, how it has grown in last year, especially considering that rural has come back, but scooters have outperformed drastically versus typically motorcycles are understood to be more a rural product? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2025 / 11:00AM, TVSM.NS - Q4 2025 TVS Motor Company Ltd Earnings Call

Question: Pramod Amthe - InCredit Equities - Analyst : And what's the scooter mix for rural and urban sir now for the industry?

Question: Pramod Amthe - InCredit Equities - Analyst : And second one is with regard to PLI. When you look at your localization, but that was the entire initiative to incentivize the localization through in your journey, where are you in terms of localization for EVs as a proportion of import versus the local produced as a percentage of value. And what is your target for next year and later on? And what are the products or subsegments or the parts, which you are looking at to drive this localization?