India’s TVS Motor beats quarterly profit view, seeks rare-earth alternatives

TVS Motor, India’s top electric two-wheeler maker by sales, beat quarterly profit estimates on Thursday on strong local sales and exports, and said it plans to seek alternative sources for rare-earth magnets in light of China’s export ban.

The company, which also makes three-wheelers, had earlier flagged short- to medium-term challenges in securing magnets, which are key for electric motors and components.

China, which produces about 90% of the world’s rare earth magnets, imposed export curbs in April. While some shipments to the U.S. and Europe have resumed, Indian firms are still awaiting Beijing’s nod.

TVS is looking at “HRA-free, cerite-based, magnet-free” alternatives - which do not include heavy rare earth elements - and also at alternate countries, chief executive officer K N Radhakrishnan said in a post earnings conference call.

On Wednesday automakers Mahindra and Mahindra and Hyundai India shrugged off medium-term issues from the export ban, with Mahindra saying it was using alternatives such as light rare-earths and ferrites.

TVS Motor’s overall two-wheeler sales rose 17% to about 1.2 million units in the quarter ending June 30, fuelled by a rising share of premium models, such as the Apache series, which account for roughly 25% of total revenues.

Its electric vehicle sales surged 35% in the June quarter, while exports, which make up nearly a fourth of the company’s overall revenue, grew 39%.

The Jupiter scooter maker’s profit jumped 34.9% from a year earlier to 7.79 billion rupees ($88.92 million) in the June quarter, beating analysts’ estimate of 7.63 billion rupees, per data compiled by LSEG.

Revenue from operations rose 20.4% to 100.81 billion rupees, above analysts’ estimate of 99.36 billion rupees.

Analysts said TVS is moving to a “richer product mix,” where high-margin offerings like high engine capacity bikes and scooters are gaining traction over entry-level models.

This shift helped push its core earnings higher, with operating EBITDA margin expanding to 12.5% in the first quarter, up from 11.5% a year earlier.