TVS Motor Expects FY26 Sales Growth in Line with Last Year, Says CEO Radhakrishnan

Two- and three-wheeler manufacturer TVS Motor Co Ltd expects positive sales momentum to continue in both domestic and international markets in the financial year 2025-26, and aims to outperform industry growth. Factors such as a repo rate reduction, income tax relief in Budget 2025, expectations of a normal monsoon, and ongoing infrastructure development are expected to drive domestic sales, said Director and CEO K.N. Radhakrishnan.

“A 50 basis points reduction in the benchmark repo rate over the last three months will help enhance the affordability of two-wheelers. This definitely translates into lower EMIs for consumers,” Radhakrishnan said during a conference call to discuss the company’s financial performance. Further, income tax relief under the new tax regime is also likely to support consumer sentiment.

The Chennai-based company also expects consistent infrastructure improvements by the government to vitalize the economy. A normal monsoon season is also expected to boost rural sentiment and spending.

While the first quarter of FY26 could be “moderate” due to a high base effect from last year, Radhakrishnan expects demand to pick up in May and June, helped by an unusually busy marriage season. “The overall growth momentum in the domestic market is likely to be similar to last year,” he said.

During the year ended March 2025, TVS Motor’s overall two- and three-wheeler sales grew by 13% to 47.44 lakh units, compared to 41.91 lakh units sold in the previous year. In the two-wheeler segment, scooter sales jumped 21% year-on-year, while motorcycle sales grew 10%. Three-wheeler sales, however, declined to 1.35 lakh units from 1.46 lakh units.

Positive On Exports

On the international front, TVS Motor anticipates a strong recovery in Africa, where demand had bottomed out last year. Although Radhakrishnan cautioned about geopolitical risks, he remains "positive" on export prospects, noting that the company's diversified product portfolio will allow it to "grow ahead of the industry."

In the March quarter, TVS Motor’s exports grew 31% year-on-year to 3.40 lakh units, generating revenue of ₹2,391 crore from international markets. For FY25, exports rose 18% year-on-year to 11.95 lakh units.

Radhakrishnan said the company witnessed high export growth in Latin America, driven by strong demand in Mexico, Colombia, and Guatemala. Growth in Asia was aided by the reopening of Sri Lanka, although Bangladesh faced some challenges. In Africa, economic slowdown, high inflation, and currency devaluation impacted growth in key countries.

Electric Vehicle Segment

TVS Motor’s EV sales surged 44% year-on-year in FY25, reaching 2.79 lakh units compared to 1.94 lakh units the previous year. The company now has over five lakh EV customers. Revenue from the EV segment stood at approximately ₹3,364 crore for FY25, with fourth-quarter revenues at ₹889 crore.

Radhakrishnan said several new EV products are in the final stages of development and are set to be launched over the coming quarters. However, he emphasized that product launches would be strategically timed to maximize market impact and return on investment.

Currently, TVS Motor sells its electric scooter iQube at 950 dealerships across India and launched its first electric three-wheeler, TVS King EV Max, earlier this year.

Scooters Outpacing Motorcycles

Scooters continue to outperform motorcycles, driven by rising urbanization and convenience factors, with EV scooters adding further momentum. Scooter sales grew 21% in FY25 to 19.04 lakh units, while motorcycle sales rose 10% to 21.95 lakh units. Scooters now account for about 38% of the two-wheeler category, a share that Radhakrishnan expects to rise further.

"With EV scooters, we expect scooters to continue growing faster than motorcycles, especially in the non-executive and commuter segments," he said.

Rural Demand Set to Strengthen

Addressing regional performance, Radhakrishnan acknowledged that rural demand dipped slightly in Q4 after robust growth in Q2 and Q3. However, he expects rural sentiment to improve in the coming months, supported by a busy marriage season, a normal monsoon, and positive agricultural trends.

“Retail financing, which saw some restrictions in late FY25, is also expected to ease, providing an additional boost to rural demand,” he added.

Margin Expansion and Strategic Investments

TVS Motor has steadily improved its EBITDA margin over the past decade, rising from 6% in FY15 to 12.3% in FY25. Radhakrishnan expressed confidence that the company would continue to leverage top-line growth, an improved product mix, and cost reduction initiatives to further boost profitability.

The company reported its highest-ever revenue and profit for FY25, with revenue growing 14% to ₹36,251 crore compared to ₹31,776 crore in the previous year. Profit before tax rose 31% to ₹3,629 crore. The operating EBITDA margin improved by 120 basis points year-on-year to 12.3%.

On investments, Radhakrishnan said FY26 capital expenditure would be similar to FY25 levels, focused on innovation, technology development, new product launches, and capacity expansion. Significant investments would continue in brands like Norton, TVS Credit, and the electric bicycle segment.