India’s TVS Motor profit jumps on exports, tax-cut fueled demand

Indian automaker TVS Motor Company posted a 37% jump in second quarter profit on Tuesday, as festive season demand after a steep tax cut and an export spike boosted revenue.

The Jupiter scooter maker reported a smaller-than-expected quarterly profit of 9.06 billion rupees ($103.08 million) in the July-to-September quarter, missing analysts’ estimate of 9.24 billion rupees, according to data compiled by LSEG.

Its shares fell 2.14% after the results to close at 3,562 rupees.

TVS Motor’s two-wheeler sales rose 23% from a year earlier, the steepest ever rise, to about 1.5 million units for the second quarter, fueled by two wheeler exports, which rose by 31%.

Total exports contributed to about 26% of its sales for the quarter.

Revenue from operations rose 29% to 119.05 billion rupees, beating analysts’ estimate of 115.45 billion rupees.

Its operating EBITDA margin expanded to 12.7% in the quarter, up from 11.7% a year earlier, driven by strong growth in scooter and motorbike sales.

Last month, India slashed taxes on motorcycles with engine capacities of up to 350cc to 18% from 28%, driving strong demand in rural and entry-level urban markets.

TVS’s electric vehicle sales jumped 7% during the quarter, but the company said availability of magnets continues to pose challenges in the short to medium term.

China, which produces about 90% of the world’s rare earth magnets that are key for electric motors and components, curbed their shipments in April.

TVS has been looking at alternatives to magnets that do not include heavy rare earth elements, its chief said in July.

Peers Bajaj Auto and Hero MotoCorp have yet to report their quarterly results.