Tvs Motors share price: Aniket Mhatre on growth prospects of TVS Motors vs Hero MotoCorp & more

There is a clear divergence in terms of what is happening in the two-wheeler market. How are you looking at the growth prospects for versus Hero MotoCorp? Do you expect to continue losing market share?

As far as

Motors is concerned, they have continued to outperform the sector. You have rightly put out that market share has improved for TVS. If you look at even the last five year CAGR, while the two-wheeler industry has seen about 5% decline over the last five years, TVS has actually shown a 2% growth.

TVS market share has moved from 18% to almost 24% for H1 of this year. Now what is happening is TVS is filling in new product gaps through new product launches and hence gaining incremental share. For instance, the Raider 125 launched last year. They did not have a good product in the 125 CC and that is helping them drive outperformance.

Similarly, Jupiter 125 is gaining share over the Access 125. It has a fresh product portfolio launch that is going on its side and hence we expect TVS to continue to gain share. As far as Hero MotoCorp is concerned, one of the biggest factors that is driving its underperformance is the fact that rural has been going down right now and bulk of Hero MotoCorp’s sales comes from rural regions and which is why its market share has seen almost over 400 basis points decline this year and now it is hovering somewhere around 47% to 48%. So, Hero continues to languish largely on account of a rural slowdown at the moment.


How would you respond to that with respect to that very cost conscious approach that the company is looking at? How would you address concerns with respect to the company losing market share in some of their key markets?

As far as the EV strategy is concerned, it is a bit of a surprising strategy but what is happening in the EV space right now and what we need to understand is the fact that most of the OEMs are right now facing supply constraints. The choice is whether you push market share with very limited supply or try and establish a brand with the supply and that is the approach Hero has taken at the moment.

Given the supply constraints, they are going out with a very slow approach and starting with the premium and then possibly moving into the entry, that is our reading of Hero’s strategy in electric at the moment. As far as market share in overall motorcycles is concerned, Hero largely is a rural play. Almost 75% of its sales comes from 100 CC category and those are largely sold in rural regions and given that monsoon has been erratic right now and rural discretionary consumption has taken a dive, two-wheeler sales continue to languish.

They are not picking up especially because 100 CC is not doing well and hence Hero is losing market share at the moment. Add to that, they have taken significant price increases as industry. The last four years has seen close to 40% price increase for the industry and that for the 100 CC segment is a bit too much to absorb in this period of time. Hence the overall market share loss.

In the 125 CC segment, they have Glamour and Super Splendor but they are losing share because of price pressure and in the premium segment they did not have material products and are largely focussed on 100 CC which is not seeing great demand at the moment. Hence the market share loss for Hero right now.

How is the Street reacting to the new launches coming in from Royal Enfield, Bajaj, etc? What is catching your attention when it comes to the entire biking space?

Royal Enfield recently launched the Hunter and it has been accepted very well given that price increases even for the Classic 350 for instance has been too high. It was the right strategy to position a product at a price point which is affordable for the customer even in the premium space and that is exactly what Royal Enfield has done and hence demand is picking up for RE’s Hunter.

TVS has recently launched a Ronin 220 which as the name suggests is a 220 CC product. Again it is seeing a pretty interesting response from customers. While it will remain a niche kind of a product, it is also seeing a pretty good momentum. Bajaj has silently launched the Pulsar N 160S. The product is pretty good and the only issue here is that they have not pushed the product through advertisement. People are still not aware whether the product is actually launched. So that is the only issue but otherwise these three new launches should do well in the foreseeable future.

How are you looking at the chip shortage issue plaguing the industry? How long do you believe some of these companies will feel its impact?

Chip shortage was a major issue towards July-August. In September-October, we have seen that easing out a bit largely for the domestic players. Globally players are continuing to see some impact. Numbers from JLR for instance have lagged expectations. Their own expectation was 90,000 and they managed to wholesale 75,000 odd. So chip shortage continued to have a bigger impact on global plays than on domestic players.

As far as experts are concerned, the indicator is that this issue will continue till the middle of 2023, if not longer because of the geopolitical tensions that we are seeing. Back home in India, players like

and , most of the passenger vehicle and two-wheeler players are seeing easing out of supply issues at the moment. There are some issues at the margin but nothing to worry about in my view.