TVS Motor Co. Ltd is rapidly expanding in the Electric Vehicle (EV) segment, ahead of incumbent operators. According to Vahan registrations, the e-2W electric two-wheeler (e-2W), the iQube, has registered more than 3,600 units in August, making it the third largest company in the e-2W segment with a 14% market share.

Of course, the new entrants are leading the race, but TVS is steadily closing the gap. In perspective, the share of TVS in the e-2W market in June was 5%.

Furthermore, continued efforts to improve margins have paid off. TVS has operated at significantly lower margins compared to other competitors for much of the last decade as it has been weak in most 2W sub-segments, analysts at Jefferies India point out.

“EBITDA TVS margin averaged just 6.4% in fiscal 10-17 compared to 15% / 20% for Hero MotoCorp Ltd / Bajaj Auto Ltd; his EBITDA / vehicle average of 2300 rupees was 60% / 77% lower than the Hero / Bajaj, “Jefferies analysts said in a report on August 18. EBITDA represents earnings before interest, taxes, depreciation and amortization.

“Its EBITDA margin has increased to 10% in the last four quarters compared to 12/16% for Hero / Bajaj; his Ebitda / vehicle has also increased to Rs 6,400 – only 10% below Hero and now 49% below Bajaj, ”the report adds.

Over the years, the company has also gained market share in various sub-segments. According to the Indian Economy Monitoring Center, TVS’s market share of 125cc + scooters and motorcycles was 15% and 11% respectively in fiscal 2017. This increased to 21% and 18% in fiscal 22, respectively.

Obviously, TVS’s domestic internal combustion scooter (ICE) portfolio is prone to increasing electric vehicle penetration as the segment accounted for almost 37% of the total volume in July. However, rising volumes of electric vehicles can offset this. “We see the potential for equity valuations to rise if TVS is able to gain a similar market share for electric vehicles as for ICE,” adds the Jefferies report.

The company’s shares have increased by 56.5% in the 2022 calendar year so far, versus a 25% and 17% increase in Bajaj Auto and Hero MotoCorp, respectively.

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