TVS Motor Company, leading manufacturer of two and three-wheelers, expects to see continued improvements in two-wheeler demand in rural markets. The company projects high single-digit growth for the industry in the third quarter of this fiscal year, supported by strong demand from these regions.

“We’re seeing promising responses from the rural market. In the previous quarter, there was a slight slowdown in overall industry performance, but during Navratri, we observed a resurgence in demand. I anticipate robust performance in the upcoming quarter, especially given the favourable monsoon conditions, which should positively impact reservoirs and drive rural demand growth,” KN Radhakrishnan, Director & CEO of TVS Motor Company said during the Q2 FY25 earnings call.

The next week will be critical in shaping the market dynamics, and Radhakrishnan expects reasonable growth in Q3, with hopes that rural performance will more closely match urban growth this year. “Overall, I predict the industry will grow by around 7-8 per cent, and TVS Motor is well-positioned to outperform the market in Q3,” he added.

During the first half of this fiscal year, rural growth was about 9 per cent, while urban growth reached around 7 per cent. “This is significant as it’s the first time we’re witnessing rural growth catching up to urban levels, even if the differences are slight. The performance of the rural market relies on factors such as monsoon conditions and agricultural productivity. Continued improvements in rural areas could positively influence the four-wheeler industry,” he explained.

Radhakrishnan also noted an increase in electric vehicle (EV) penetration in the two-wheeler segment in the country, which stood at 7 per cent in Q2. The company achieved its highest-ever quarterly electric two-wheeler sales of 75,000 units in the September quarter. The company generated a revenue of ₹1,600 crore from EV sales during the first half of this fiscal year.

Regarding pricing strategies in the EV segment, Radhakrishnan stated that the company aims to deliver products at competitive prices without relying on discounts. Recently, TVS introduced a single-battery pack variant of the iQube at a lower price point to target specific customer segments amid rising competition.

Q2 performance

In the September 2024 quarter, TVS reported its highest-ever quarterly net profit of ₹663 crore, an increase from ₹537 crore in the same period last year. The company also achieved its highest-ever operating revenue of ₹9,228 crore for the September 2024 quarter, reflecting a 13 per cent rise compared to ₹8,145 crore in Q2 2023.

Operating EBITDA reached a record ₹1,080 crore, marking a 20 per cent growth from ₹900 crore in the second quarter of 2023-24. The operating EBITDA margin improved by 70 basis points to 11.7 per cent, up from 11.0 per cent in the year-ago period.

For the half-year ending September 30, 2024, the company’s net profit increased by 23 per cent to ₹1,240 crore, compared to ₹1,004 crore in the same period last year. Total revenue grew by 15 per cent to ₹17,604 crore, up from ₹15,363 crore.

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