The global brokerage has raised its target price on TVS Motor Company share as it believes TVS Motor’s New Jupiter is a significant upgrade over the old model and peers.
UBS highlighted the following points while backing its claim:
>> The new engine is lightweight and compact with power/ torque being 2 per cent/ 11 per cent higher than the outgoing engine.
>> Despite better performance, the iGO assist technology will lead to 10 per cent higher fuel efficiency.
>> First or best-in-segment features such as dual helmet under-seat storage, front fuel filing, body balance 2.0 tech, longest seat, emergency brake warning, follow me headlight, hazard lamps, etc.
>>A new modern design with an infinity light bar and premium piano black contrast panels.
>> TVS SmartXonnect tech with multiple additional features and bigger brakes.
The brokerage further said, at a similar price Jupiter, which is TVS’s largest selling brand, started the turnaround of the company when it was launched in September 2013.
“With enhancements in the new Jupiter, the brand boasts of a long list of segment-first features including front fuel filling and a 33-litre boot that can store two helmets. We believe many of these features can’t be replicated by competitors in the near to medium term handing Jupiter a large window to grab market share (like we have seen with the strong success of Jupiter 125),” the report read.
Moreover, despite all the enhancements, the company has not increased the pricing against the outgoing model, making the customer value proposition very favourable, UBS added.
Further, “the new Jupiter can aid 15,000-20,000 additional volumes (that is 30-40 per cent growth over the outgoing model),” said UBS. It added that this additional volume represents 7 per cent/ 5 per cent of domestic two-wheeler/ total TVS volumes.
Additionally, the brokerage believes that TVS’ launch of a brand new e-2W and foray into the e3W category in the next few months will offer further catalysts.
On the valuation front, UBS has raised its 2W volume forecast to 14 per cent against the earlier 11 per cent. The brokerage has also factored in the benefits of the Production Linked Incentive (PLI) scheme (from FY26 onwards although peers are accounting for the benefits in FY25).
Given this, it has forecasted Ebitda growth of 26 per cent, which brings their target EV/EBITDAG of 0.8x over FY24-27E for TVS as against 1.2x each for Hero Motocorp/ Bajaj Auto.
“We are modelling in 80bps conservatively, while 13 per cent of EV rev. indicate 120bps. These factors are leading to 8 per cent/ 5 per cent higher Ebitda over FY26/ FY27E. We continue to value the auto business at 20x 1-year forward EV/Ebitda. We value the stake in subsidiaries at Rs 250 (Rs 200 earlier),” the report read.
First Published: Aug 23 2024 | 9:31 AM IST
