TVS Motor shares trade off 4% from day's high after Q2 results, financial services demerger; check latest target prices

Shares of TVS Motor Company Ltd. were trading around 4% below the day's high on Thursday, October 29, after the company reported its Q2 FY27 results and announced plans to demerge its consumer finance business into a separate listed entity.

Brokerages remained positive on the stock following the earnings announcement. CLSA has an ‘Outperform’ rating on TVS Motor with a price target of ₹4,896, while Nomura has a ‘Buy’ rating with a target price of ₹4,605.

TVS Motor reported a 43.7% year-on-year increase in standalone revenue to ₹17,103 crore in Q2 FY27, compared with ₹11,905 crore a year earlier. Revenue also exceeded the estimate of ₹16,790 crore.

EBITDA rose 47.2% year-on-year to ₹2,219 crore from ₹1,507 crore, marginally ahead of the estimate of ₹2,200 crore. The EBITDA margin stood at 13%, compared with 12.7% a year earlier and an estimate of 13.2%.

Net profit increased 52.3% year-on-year to ₹1,377 crore from ₹904 crore, slightly above the estimate of ₹1,370 crore.

CLSA said that TVS Motor's EBITDA margin expanded 17 basis points sequentially to 13% in Q2 FY27, despite a 1.9% quarter-on-quarter increase in commodity costs. The brokerage attributed the resilience to the company's scale, a 1.6% price increase, operating leverage, cost optimisation and favourable foreign exchange movements.

Management remains confident of sustaining volume momentum at a high single-digit growth rate and expects to outperform the industry in both domestic and export markets.

CLSA also highlighted the planned demerger of TVS Motor's financial services business in FY28, saying the move could unlock value in the non-banking financial company (NBFC) business and reduce the parent company's annual investment requirements.

Nomura has a ‘Buy’ rating on TVS Motor with a price target of ₹4,605. The brokerage sees a strong growth outlook across segments, with premium motorcycles, electric vehicles and exports expected to support performance. It also noted that average selling prices in Q2 were ahead of consensus expectations.

At 26.7 times its estimated FY29 earnings per share, excluding investments, Nomura considers the valuation attractive, given its expectation of a 20% compound annual growth rate (CAGR) in earnings per share over FY27–FY29.

However, the brokerage flagged risks from potentially lower electric vehicle margins compared with internal combustion engine vehicles after the production-linked incentive (PLI) scheme ends in FY28. It also cautioned that substantial investments and capital expenditure could pressure free cash flow if growth does not keep pace.

What management said

TVS Motor expects the domestic and international two-wheeler and three-wheeler markets to grow at a healthy single-digit rate in the second half of FY27. The company expects to continue outpacing industry growth in both domestic and export markets.

The company is expanding its electric vehicle capacity to up to 80,000 units to meet pent-up demand. Management also highlighted healthy demand in semi-urban and rural markets, with electric vehicle adoption in rural areas growing particularly quickly.

However, management said the recent rise in raw material costs had been unprecedented, requiring a careful balance between passing on cost increases to customers and sustaining demand. It also cautioned that a higher base could make year-on-year growth more challenging in the coming quarters.

TVS Motor plans to separate its consumer finance and related businesses into a distinct listed entity. Under the proposed scheme, shareholders will receive one share in the resulting company for every share held in TVS Motor, subject to the scheme's terms and applicable approvals.

The company said the demerger is intended to unlock shareholder value by creating a more focused platform, allowing greater strategic autonomy, sharper capital allocation and flexibility to pursue opportunities in the financial services sector.

The financial services business serves more than 45 million customers through around 1 lakh touchpoints across India, according to the information provided. The process is expected to take eight to 10 months and remains subject to statutory, regulatory, shareholder and other approvals.

TVS Motor shares are up around 12% so far in 2026 but remain approximately 5.5% below their 52-week high.