The first-quarter results of TVS Motor Co. Ltd. have sparked a divided opinion among Jefferies and Citi as they have taken a chalk and cheese stance on the outlook. Spurred by optimistic outlook on growth, Jefferies has maintained a ‘buy’ rating and increased its target price. On the other hand, Citi has reiterated its ‘sell’ rating, though it has also slightly raised its target price.
Jefferies Bullish On Rural Recovery And Premiumisation
Jefferies maintained a positive stance on TVS Motors, viewing the company as a key beneficiary of the ongoing recovery in the rural segment. The brokerage also highlighted the company’s strong performance in the premium two-wheeler and scooter segment as a significant growth driver.
According to Jefferies, the company’s focus on premiumisation and its strong presence in key market segments will help it outperform competitors.
The brokerage expects these moves, coupled with a healthy demand environment, to justify its bullish outlook and the increased target price of Rs 3,000.
Citi Cautions On ‘Pricey’ Valuation, Competitive Pressures
In contrast, Citi maintained a ‘sell’ rating on the counter, despite noting that TVS Motor’s first-quarter results were “marginally above estimates” and driven by “slightly better realisations.”
The brokerage acknowledged a positive outlook from management, with expectations of a revival in demand in the second quarter and a healthy festive season. However, Citi’s primary concern was the company’s valuation.
The brokerage noted that the stock’s valuation was significantly above that of peers and left little room for error. Citi noted that the competition in the Indian two-wheeler space, particularly in the 125cc bike segment, remained elevated. They also noted that the upcoming launch of new aggressively priced models in the electric two-wheeler segment could pose a risk.
While Citi increased its target price to Rs 2,100 from Rs 2,050, it maintained a cautious view on the stock’s high valuation and competitive risks.
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