29 January 2025

Equities
Indian 2W sector Automobiles

Risk-reward favourable now India

◆ TVS 3Q25 margins were a beat, while Bajaj was just about in Yogesh Aggarwal*
line; we see outlook for TVS as better than Bajaj Head of Research, India
HSBC Securities and Capital Markets (India) Private Limited
[email protected]
◆ 2W industry may still grow high-single-digits in FY26, while +91 22 2268 1246

export traction continues to improve Vipul Agrawal*, CFA

Analyst, Automotive
HSBC Securities and Capital Markets (India) Private Limited
◆ With stock correction, we see value in 2W stocks: we upgrade [email protected]
+91 97690 51842
TVS to Buy (from Hold); prefer Bajaj as well; d/g OLA to Hold
Vishal Goel*, CFA
Analyst, India Automotive Research
2W growth has moderated in the recent months, though we still expect the industry to HSBC Securities and Capital Markets (India) Private Limited
grow in high-single digits in FY26. The past 10-year CAGR for the industry is still less than [email protected]
+91 0 80 6737 2115
3% and lower than most other auto segments. Electrification has been rather slow despite
significant incentives by the government. Positively, rural is recovering and so is the
* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is
export market. Overall, factoring in these moving parts we upgrade TVS to Buy from Hold not registered/ qualified pursuant to FINRA regulations
and downgrade OLA to Hold from Buy. We retain our Buy rating on Bajaj. Valuations look
relatively undemanding now post the recent correction and earnings downside limited
post revisions in 3Q.

TVS’s risk-reward looks favourable now: TVS arguably has the most established R&D
capacity amongst the 2W OEMs. The company has been able to maintain share in the
domestic market and has gained decent traction in EVs as well. We see this as a positive
back-drop for TVS in the medium term. Finally, TVS continues to gain traction in export
markets as well. The stock has corrected by 25% from the top and is now valued at 34x
FY26e EPS. Admittedly, losses in subsidiaries like Norton remain a worry for us, but
standalone margins have high visibility, thanks to PLI accruals from 4Q as well. Important
to note: at the industry level ICE scooter share is stable at c31% since FY21, while EV
scooters have taken market share mostly from economy MCs (75-110cc) (exhibit 2),
especially urban economy MC sales. This reduces the ICE scooter cannibalisation risks
for TVS. Upgrade to Buy with TP of INR 2,800.

Ola’s challenges: Since the IPO, OLA has consistently disappointed on volumes, largely
led by quality and service issues. While the company has addressed the service issues
and OLA is schedule to launch an EV motorcycle soon, competition catch-up has also
been aggressive (exhibits 3 and 4). OLA’s market share is down to c23%, from 1QFY25’s
peak of 49%. With waning confidence in medium- to long-term estimates, we downgrade
the stock to Hold from Buy. We cut our estimates; our TP is now INR70 (earlier INR100).

Bajaj – EV success vs CNG disappointment: We retain our Buy rating on Bajaj

given a diversified earnings profile and reasonable valuations post the recent stock
correction. However, we lower our TP to INR10,500 from INR11,500 as we lower the
long-term growth rate. Export volumes are gradually improving as well. The
impending launch of e-Rickshaw is an upside catalyst. The company lost market
share in MCs in the recent months (2024) on launches from competition in the 125cc Tempered enthusiasm
category in particular. We expect Bajaj’s MC market share to stabilize in 2025. The 18th edition of the EM Sentiment Survey
Further loss of market share is a downside risk.
Click to view

Disclosures & Disclaimer Issuer of report: HSBC Securities and Capital

Markets (India) Private Limited
This report must be read with the disclosures and the analyst certifications in
the Disclosure appendix, and with the Disclaimer, which forms part of it. View HSBC Global Research at:
https://www.research.hsbc.com
 Equities ● Automobiles
29 January 2025

Exhibit 1: Changes in ratings and target prices

MCap Current _____ TP ______ ____ Rating ____ Upside/ 3M ADTV _____ PE ______ __ EV/Sales ____
Company Ticker Currency (USDm) price Old New Old New downside USDm FY25e FY26e FY25e FY26e
Bajaj Auto BJAUT IN INR 27,157 8,398.40 11,500.00 10,500.00 Buy Buy 25.0% 105 29.5 25.1 4.4 3.8
TVS Motor TVSL IN INR 12,840 2,335.80 2,800.00 2,800.00 Hold Buy 19.9% 38 42.6 35 2.9 2.5
Ola Electric OLAELEC IN INR 3,151 65.16 100.00 70.00 Buy Hold 7.4% 110 nm nm 5.4 4.5
Source: HSBC. Current prices are as at 28 Jan 2025.

Exhibit 2: Segment wise 2W growth: The electric 2W is taking away market share from
economy motorcycles not from ICE scooters
◆ Scooter (ICE + EV) share has touched new high of 36% in FY25e after declining to 31% in
FY21 (from 35% in FY18). This time it is driven by electrification and electric scooters have
taken market share from economy (75-110cc) motorcycles.
◆ We believe that electrification has impacted the urban demand of the economy motorcycle
segment the most. E-Scooters present a better proposition in urban markets due to better
roads, charging infrastructure, and cost-efficient commuting.

100% 3% 4% 4% 4% 4% 4% 4% 5%
5% 5%
4% 4% 4% 4% 4% 6% 5% 5% 5% 4%
90% 6% 8% 6% 7% 6% 4% 4% 4% 5%
4%
80% 11% 11% 11% 10% 14% 17%
17% 17% 18% 18%
70%
60%
42% 39% 39% 41% 38% 38% 33% 31% 29%
50% 37%
40%
2% 5% 5% 6%
30%
20% 35%
32% 34% 33% 33% 31% 30% 31% 30% 31%
10%
0%
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
ICE scooter e-Scooter 75-110 MC 110-125 MC
125-150cc MC 150-200cc MC 200-250cc MC 250-800cc MC
Source: Company data, HSBC *75-100cc, 125-150cc and 150-200cc segments’ last peak was in FY19; 125-150cc, 200-250cc and >250cc segments’ last peak was in FY18
Note: FY25 data is for 9 months

Exhibit 3: Monthly OEM market share for e2W

Monthly run rate for Ola is struggling to touch 20k. Since the IPO, OLA has consistently
disappointed on volumes, largely led by quality and service issues.

100%
12.5% 10.8% 12.4% 12.9% 10.7% 10.1% 9.3% 9.4% 9.2% 8.6% 10.1% 13.4% 10.4%
80% 11.4% 11.0% 12.4% 6.3% 8.0% 7.8% 9.5%
3.8% 2.5% 3.4% 2.9% 12.4% 14.3% 11.6% 10.8% 14.2%
13.6%
2.9% 3.0% 2.1% 11.8% 2.8% 3.7% 3.7%
15.3% 17.5% 18.3% 3.2% 3.1% 3.8%
60% 18.7% 17.7% 19.0% 19.8% 20.2% 21.6%
11.5% 12.0% 22.7% 23.5% 25.1%
11.3%
13.3% 14.2% 12.9% 16.5%
40% 18.9% 21.2% 20.3%
22.0% 22.6%
24.9%
52.1% 48.3% 46.1%
20% 39.5% 41.2% 38.2% 38.8%
31.0% 27.3% 29.8% 24.5%
18.7% 23.0%
0%
Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25*
Ola Bajaj TVS Greaves Ather HeroMoto Others

Source: Vahan
Note: Jan-25 data is for first 27 days

2
 Exhibit 4: e2W Spec Sheet
Competition catch-up has been aggressive in the e2W space. Bajaj and TVS now have lower cost variants in their electric 2W portfolios, launched between June and August
2024, which are now providing Ola with tough competition.
OEM _______________________ Ather _______________________ ____________________ OLA ____________________ ___________ Bajaj ____________ ________________ TVS _______________
Variant / Price -INR Rizta S - Rizta Z - Rizta Z - 450 S - 450 X - 450 X - 450 S1 X - S1 X - S1 X - S1 X + S1 Air S1 Pro Chetak Chetak Chetak Chetak i-Qube i-Qube i-Qube i-Qube i-Qube
'000s 2.9KWH 2.9KWH 3.7KWH 2.9KWH 2.9KWH 3.7KWH Apex 2KWH 3KWH 4KWH 2903 3202 3502 3501 2.2 Standard S ST 3.4 ST 5.1
Ex-showroom Price - 135 148 162 145 157 167 200 80 98 112 105 117 145 110 125 130 142 117 147 156 166 185
EMPS Subsidy 10 10 10 10 10 10 0 10 10 10 10 10 10 10 10 10 10 10 10 10 10 -
OEM discount 14 11 5 5 - 0 - 4 - 5 - - - - -
Ex-showroom Price 111 127 147 130 147 157 200 70 88 102 95 107 135 96 115 120 127 107 137 146 156 185
after discount/subsidy
RTO 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2
Insurance 8 9 9 9 9 9 10 8 8 9 9 9 13 6 6 7 7 6 6 6 6 7
Handling 3 3 3 3 3 3 1 1 1 1 1 1 1 1 1
On road price exc. 122 137 158 140 157 168 211 82 100 115 107 120 151 104 124 129 137 114 144 154 163 195
software pack
Software pack 14 17 20 14 17 20 0 3 5 5 5 4 6 6
Power & Performance
Battery - kWh 2.9 2.9 3.7 2.9 2.9 3.7 3.7 2.0 3.0 4.0 3.0 3.0 4.0 2.9 3.2 3.5 3.5 2.2 3.4 3.4 3.4 5.1
Rated Range - Km 123 123 159 115 111 150 157 95 143 190 151 151 195 123 137 153 153 75 100 100 100 150
Charging time - hrs 8.3 8.5 6.2 8.3 8.4 5.5 5.5 5.0 7.4 6.5 7.4 5.0 6.5 6.0 5.8 3.3 3.0 5.1 5.1 5.7 5.1 4.3
Max speed - km/h 80 80 80 90 90 90 100 85 90 90 90 90 120 63/63* 63/73* 73/73* 73/73* 75 78 78 78 82
Source: Company data
Note: *with Techpack subscription

Equities ● Automobiles
29 January 2025
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 Equities ● Automobiles
29 January 2025

TVS 3QFY25 result (TVSL IN, Buy, TP INR2,800)

TVS Motor’s 3Q25 highlights: The company reported revenues at INR91.0bn (up 10% y-o-y), in
line with our estimates and with realisation at INR75.1k, flat q-o-q. Gross margin contracted 10bp q-
o-q to 28.4%. EBITDA margin expanded by 70bp y-o-y and 20bp q-o-q to 11.9% and was above our
estimate of 11.6%.

Key takeaways from the TVS Motor’s conference call

◆ Growth outlook: Rural demand is expected to grow in the coming months on the back-drop of
good water reservoir levels. Urban growth rate will be moderate due to high base.
◆ Export outlook: Retails are improving across export markets and especially in Africa. The
company continues to grow in LATAM on a low base while Sri Lanka is also opening now, which
is a positive. Bangladesh continues to struggle due to geo-political challenges. Overall, company
expectations remain optimistic on export growth on the back of new launches and entry in new
geographies.
◆ PLI benefit accrual: The company will accrue full year PLI benefit in 4Q for FY25. The quantum
of benefit will depend on model mix, launch timings of models, and PLI certification of models.
Company sold c200 e2W in 9MFY25.
◆ e3W: TVS launched its electric 3W “TVS King EV Max” in January 2025. Management expects
TVS King as its re-entry in 3W market in India.
◆ EV dealerships: iQube is available at 900 dealerships out of 1400 main dealerships and fairly
covers all the geographies.
◆ Impact of BS6 Phase 2 emission norms: The actual cost increase is not finalised yet but it will
be competitive to current pricing levels and it will not be as high as BS4 to BS6 transition.
◆ Norton will launch its first model towards the end of this year and second model by mid next
year.

Exhibit 5: TVS Motor’s 3QFY25 result summary

4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25
Volumes (#) 868,417 953,244 1,074,378 1,100,843 1,062,529 1,087,175 1,228,193 1,211,952
Total Revenues (INR mn) 66,048 72,179 81,446 82,450 81,688 83,756 92,282 90,971
Average Selling Price (INR) 76,055 75,719 75,808 74,897 76,881 77,040 75,137 75,061
EBITDA (INR mn) 6,798 7,638 8,998 9,244 9,262 9,602 10,798 10,815
PAT (INR mn) 4,103 4,677 5,366 5,934 4,854 5,773 6,626 6,185
EPS (INR) 8.63 9.84 11.29 12.49 10.22 12.15 13.95 13.02
y-o-y
Total Revenues 19.4% 20.1% 12.8% 26.0% 23.7% 16.0% 13.3% 10.3%
Average Selling Price 17.8% 14.3% 7.9% 0.6% 1.1% 1.7% -0.9% 0.2%
EBITDA 22.1% 27.4% 22.2% 40.3% 36.3% 25.7% 20.0% 17.0%
PAT 49.5% 45.9% 31.7% 68.2% 18.3% 23.4% 23.5% 4.2%
EPS 49.5% 45.9% 31.7% 68.2% 18.3% 23.4% 23.5% 4.2%
Product Mix
2W volumes (#) 839,295 918,482 1,031,372 1,062,777 1,032,193 1,056,350 1,190,309 1,182,634
y/y 3% 7% 6% 27% 23% 15% 15% 11%
3W volumes (#) 29,122 34,762 43,006 38,066 30,336 30,825 37,884 29,318
y/y -30% -24% -15% -12% 4% -11% -12% -23%
EBITDA margin trends
Raw material + stock change 75.4% 74.6% 74.0% 73.7% 72.8% 71.4% 71.5% 71.6%
Staff costs 5.1% 5.2% 4.8% 4.9% 5.1% 5.7% 5.4% 5.5%
Other expenses 9.2% 9.6% 10.1% 10.2% 10.8% 11.4% 11.4% 11.1%
EBITDA margins 10.3% 10.6% 11.0% 11.2% 11.3% 11.5% 11.7% 11.9%
Other ratios
Depreciation as % Sales 2.5% 2.3% 2.1% 2.2% 2.3% 2.1% 2.0% 2.1%
Tax Rate 24.9% 23.4% 25.9% 23.4% 27.7% 26.3% 26.1% 26.1%
Source: Company reports, HSBC

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 Equities ● Automobiles
29 January 2025

Exhibit 6: TVS product and geography mix trends

4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25
Proportion
(Domestic + Exports)
Scooter 39.2% 36.7% 39.1% 36.7% 37.3% 38.5% 39.9% 40.7%
Motorcycles 44.7% 48.6% 45.9% 47.5% 48.1% 47.3% 45.7% 45.9%
Mopeds 12.7% 11.1% 11.0% 12.3% 11.8% 11.4% 11.3% 11.0%
2Ws 96.6% 96.4% 96.0% 96.5% 97.1% 97.2% 96.9% 97.6%
3Ws 3.4% 3.6% 4.0% 3.5% 2.9% 2.8% 3.1% 2.4%
Total Volumes 100% 100% 100% 100% 100% 100% 100% 100%
Domestic 78.6% 76.1% 74.2% 77.4% 75.5% 76.7% 74.9% 75.8%
Exports 21.4% 23.9% 25.8% 22.6% 24.5% 23.3% 25.1% 24.2%

Growth y-o-y:
(Domestic + Exports)
Scooter 29.9% 12.4% 11.6% 36.7% 16.4% 19.5% 16.8% 22.0%
Motorcycles -12.0% 7.2% 3.5% 20.4% 31.6% 11.2% 13.7% 6.3%
Mopeds -0.7% -3.2% -4.6% 28.2% 13.1% 16.9% 17.9% -1.5%
2Ws 3.0% 6.7% 5.6% 27.1% 23.0% 15.0% 15.4% 11.3%
3Ws -30.3% -24.4% -14.9% -12.5% 4.2% -11.3% -11.9% -23.0%
Total Volumes 1.4% 5.1% 4.6% 25.2% 22.4% 14.1% 14.3% 10.1%
Domestic 26.2% 27.6% 9.3% 34.6% 17.5% 14.9% 15.3% 7.7%
Exports -41.2% -32.7% -7.1% 0.9% 40.3% 11.5% 11.4% 18.2%
Source: SIAM, HSBC

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 Equities ● Automobiles
29 January 2025

Bajaj Auto 3QFY25 result (BJAUT IN, Buy, TP INR10,500)

Bajaj Auto 3Q25 highlights: The company reported net revenues of INR128.1bn (up c6%y-o-
y) (v/s est. IN128.3bn) with realisation at INR101.6K, down 2.1% q-o-q. Gross margins were
flat as commodities overall remained flat. EBITDA margins therefore remained flat q-o-q at
20.2% (in line with consensus expectation). Adjusting for staff cost accounted in Bajaj auto
technologies limited, the EBITDA margin is 19.6%.

Key takeaways from the Bajaj’s conference call

◆ Domestic outlook and new launches: Management expects industry to grow at 6-8% in
FY26 and 125cc segment to grow faster than the industry. The company will introduce nine
variants (EV+ICE) models between December and March with multiple price points.
◆ EV business: Overall EV business has achieved breakeven as losses in e2W are offset by
profits in e3W business.
◆ With new E2W platform “35”, the e2W business profitability is in sight now. The “35”
platform was launched in Dec 2024 with two variants. It is cost efficient with longer range,
advance display, and better product quality.
◆ E3W are available in over 800 dealerships and the segment will see more launches in the
coming months.
◆ E-Rick launch is expected around March - April 2025. The idea is growth with reliable
product as lot of current eRicks are import dependent or are of substandard quality. Current
TAM is c45k units per month.
◆ Exports – Bajaj is seeing growth recovery across export markets. EU volumes grew by 27% y-
o-y, LatAm saw strong growth and Africa has also started showing signs of recovery now.
Nigeria was steady at 100k units during the 3Q which is positive after declining for many
quarters. KTM exports were adversely impacted due to financial restructuring at Pierer Mobility.
◆ OBD 2 norms applicable from April 2025 - The price increase will be reflected from 1
April this year.
◆ Bajaj Auto credit limited (BACL) – The company completed its pan India roll out in 3Q
which was ahead of schedule, generating PAT of INR520mn in 3Q.
◆ RM cost inflation – In 3Q, inflation rubber cost was offset by a decline in steel, lead, and
nickel. Management expects slight commodity inflation in 4Q.
◆ CNG bike: Management softened its stance on the CNG bike growth outlook. Low CNG
pump density is adversely impacting the pick-up in CNG bike penetration. Currently, trade-
off between time spent over for CNG filling vs cost saving doesn’t seem favourable and it
might take some stime for CNG bike to pick up.

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 Equities ● Automobiles
29 January 2025

Exhibit 7: Bajaj Auto 3QFY25 result summary

INR mn 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25
Volume ('000 units) 855 1,027 1,054 1,201 1,069 1,102 1,222 1,224
Total Revenues 89,047 103,098 107,773 121,135 114,847 119,280 131,275 128,069
Average Selling Price 100,948 97,835 99,805 98,526 104,610 104,780 103,872 101,647
EBITDA 17,166 19,539 21,329 24,299 23,063 24,153 26,522 25,807
PAT 14,329 16,648 18,361 20,419 19,360 19,883 20,050 21,087
EPS 50.6 59.6 65.8 73.1 69.3 71.2 71.8 75.5
y-o-y
Total Revenues 11.7% 28.8% 5.6% 30.0% 29.0% 15.7% 21.8% 5.7%
Average Selling Price 27.6% 17.6% 15.9% 7.1% 3.6% 7.1% 4.1% 3.2%
EBITDA 25.7% 50.6% 21.3% 36.8% 34.4% 23.6% 24.3% 6.2%
PAT -2.5% 41.9% 20.0% 36.9% 35.1% 19.4% 9.2% 3.3%
EPS 27.0% 43.8% 21.6% 38.8% 36.9% 19.4% 9.2% 3.2%
Product Mix
Domestic MC 47.4% 50.8% 45.6% 51.4% 46.9% 48.9% 45.2% 41.7%
Domestic 3W 11.7% 9.6% 12.5% 10.2% 10.3% 9.8% 11.5% 9.7%
Export MC 36.3% 33.7% 35.7% 32.0% 34.6% 33.4% 32.5% 38.1%
Export 3W 4.0% 3.8% 3.8% 3.2% 3.9% 3.9% 4.0% 4.1%
EBITDA margin trends
Raw material + stock change 69.8% 71.9% 71.0% 71.1% 70.3% 70.0% 71.3% 71.3%
Staff costs 4.1% 3.7% 3.5% 3.2% 3.4% 3.6% 3.0% 3.0%
Other expenses 7.0% 5.6% 5.7% 5.8% 6.4% 6.1% 5.5% 5.6%
EBITDA margins 19.3% 19.0% 19.8% 20.1% 20.1% 20.2% 20.2% 20.2%
Other ratios
Depreciation as % Sales 0.8% 0.8% 0.8% 0.7% 0.8% 0.8% 0.7% 0.8%
Tax Rate 24.0% 24.5% 23.5% 23.7% 23.8% 24.2% 26.1% 24.7%
Source: Company Reports

Exhibit 8: Bajaj Auto volume trends

4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25
Domestic
Economy 108,341 138,569 141,090 180,496 108,947 125,423 137,507 148,524
Executive 164,499 238,909 177,329 240,965 206,922 225,538 233,537 227,862
Premium 132,446 144,303 162,375 196,352 185,234 187,682 181,670 133,895
MC 405,286 521,781 480,794 617,813 501,103 538,643 552,714 510,281
Scooter 7,716 20,834 21,548 33,692 39,628 40,854 70,387 77,524
3Wheelers 100,033 98,625 132,236 122,828 110,449 108,124 139,910 119,250
Total Domestic 513,083 641,556 637,556 778,281 657,330 690,621 776,711 707,105
Exports
MC 310,415 346,399 376,263 384,740 369,936 368,420 396,407 466,766
3Wheeler 34,290 39,452 40,134 37,976 41,310 43,015 48,386 50,601
Total Exports 344,705 385,851 416,397 422,716 411,246 411,435 444,793 517,367
Domestic +Export
MC 715,701 868,180 857,057 1,002,553 871,039 907,063 949,121 977,047
Scooter 7,764 21,150 24,526 37,640 45,778 43,854 84,087 77,574
3Wheeler 134,323 138,077 172,370 160,804 151,759 151,139 188,296 169,851
Total Units sold (nos) 855,050 1,027,091 1,053,953 1,200,997 1,068,576 1,102,056 1,221,504 1,224,472

Proportion of total (%)

Domestic
Economy 13% 13% 13% 15% 10% 11% 11% 12%
Executive 19% 23% 17% 20% 19% 20% 19% 19%
Premium 15% 14% 15% 16% 17% 17% 15% 11%
MC 47% 51% 46% 51% 47% 49% 45% 42%
Scooter 1% 2% 2% 3% 4% 4% 6% 6%
3Wheelers 12% 10% 13% 10% 10% 10% 11% 10%
Total Domestic 60% 62% 60% 65% 62% 63% 64% 58%
Exports
MC 36% 34% 36% 32% 35% 33% 32% 38%
3Wheeler 4% 4% 4% 3% 4% 4% 4% 4%
Total Exports 40% 38% 40% 35% 38% 37.3% 36.4% 42.3%
Domestic +Export
Domestic +Export 84% 85% 81% 83% 82% 82% 78% 80%
Scooter 1% 2% 2% 3% 4% 4% 7% 6%
3Wheeler 16% 13% 16% 13% 14% 14% 15% 14%
Total Units sold (nos) 100% 100% 100% 100% 100% 100% 100% 100%
Source: SIAM, HSBC

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 Equities ● Automobiles
29 January 2025

Earnings revisions

Exhibit 9: Bajaj Auto earnings revisions

__________ New ___________ __________ Old ____________ ________ Change % _________
Bajaj Auto (INR m) FY25e FY26e FY27e FY25e FY26e FY27e FY25e FY26e FY27e
Volume ('000 Units) 4,741 5,321 5,872 4,697 5,284 5,833 0.9% 0.7% 0.7%
Revenue 506,795 580,320 638,987 502,303 578,768 637,323 0.9% 0.3% 0.3%
EBITDA 101,860 119,031 132,257 100,521 118,713 131,925 1.3% 0.3% 0.3%
EBITDA margin 20.1% 20.5% 20.7% 20.0% 20.5% 20.7% 9bp 0bp 0bp
PBT 111,668 130,641 144,859 110,913 130,334 144,540 0.7% 0.2% 0.2%
PAT 84,553 99,287 110,093 84,183 99,054 109,850 0.4% 0.2% 0.2%
EPS (INR) 302.86 355.64 394.34 301.47 354.80 393.47 0.5% 0.2% 0.2%
Source: HSBC estimates

Exhibit 10: TVS earnings revisions

__________ New ___________ __________ Old ____________ ________ Change % _________
(INR mn) FY25e FY26e FY27e FY25e FY26e FY27e FY25e FY26e FY27e
Revenue 358,444 403,070 449,849 355,042 401,471 450,190 1.0% 0.4% -0.1%
EBITDA 43,326 51,593 59,830 41,339 50,184 58,525 4.8% 2.8% 2.2%
EBITDA margin 12.1% 12.8% 13.3% 11.6% 12.5% 13.0% 44bp 30bp 30bp
PBT 35,167 42,432 49,824 33,598 41,078 48,528 4.7% 3.3% 2.7%
PAT 26,063 31,739 37,268 24,964 30,727 36,299 4.4% 3.3% 2.7%
EPS (INR) 54.86 66.80 78.44 52.54 64.67 76.40 4.4% 3.3% 2.7%
Source: HSBC estimates

Exhibit 11: OLA Electric earnings revisions

___________ New ____________ ____________ Old ____________ _________ Change ___________
INR mn FY25e FY26e FY27e FY25e FY26e FY27e FY25e FY26e FY27e
Revenue 48,110 62,055 94,171 52,959 74,634 121,105 -9% -17% -22%
EBITDA (10,482) (1,080) 4,238 (11,209) (1,674) 5,450 NM NM -22%
EBITDA Margin -21.8% -1.7% 4.5% -21.2% -2.2% 4.5% -62bp 50bp 0bp
EBIT (15,952) (7,187) (2,709) (16,661) (7,688) (1,309) NM NM NM
PBT (13,941) (5,878) (1,188) (14,649) (6,379) 212 NM NM NM
PAT (13,941) (5,878) (1,010) (14,649) (6,379) 180 NM NM NM
EPS (3.16) (1.33) (0.23) (3.32) (1.45) 0.04 NM NM NM
Source: HSBC estimates

8
 x

10%
20%
30%
40%
50%
60%
70%
80%
90%
10%
20%
30%
40%
50%
60%
70%
80%
90%

0%
0%

100%
100%

1Q21 20.7% 55.4% 9.6%5.7%6.1% 1Q21 69.6% 26.2% 4.2%

Bajaj
mopeds

2Q21 17.5% 52.3% 16.6%6.1%4.5% 2Q21 67.1% 28.7% 4.2%

Source: SIAM, HSBC

Source: SIAM, HSBC
3Q21 18.5% 52.1% 13.6% 6.9%5.9% 3Q21 65.9% 29.6% 4.4%
4Q21 17.3% 48.6% 17.8%5.9%6.7% 4Q21 64.6% 31.9% 3.6%

market share

HMCL
Motorcycles
1Q22 19.6% 50.5% 12.9%7.8%6.0% 1Q22 71.9% 25.2%2.9%
2Q22 18.6% 48.4% 18.7%7.1% 4.0% 2Q22 62.9% 33.2% 3.9%
3Q22 19.3% 47.4% 15.5%8.6%6.2% 3Q22 67.1% 29.3% 3.6%

HMSI
4Q22 15.3% 47.4% 17.9%8.1%7.3% 4Q22 63.5% 33.3% 3.2%
1Q23 12.8% 51.9% 18.0%6.4%6.6% 1Q23 63.0% 34.1% 2.9%

TVS
2Q23 20.4% 43.2% 17.8%8.4%6.1% 2Q23 63.0% 34.6% 2.4%

Scooters
3Q23 17.6% 43.3% 18.2% 9.7%8.0% 3Q23 63.4% 33.9% 2.6%
4Q23 17.7% 50.6% 7.8% 11.3% 8.4% 4Q23 61.4% 35.7% 2.9%
Share remained range bound in 3Q over 2Q

1Q24 19.1% 45.0% 13.3%10.8%7.6% 1Q24 64.1% 33.4% 2.5%

Yamaha
2Q24 16.5% 43.5% 19.2% 9.9%7.2% 2Q24 62.1% 35.4% 2.5%
3Q24 20.0% 41.6% 17.2%10.8%6.9% 3Q24 63.6% 33.6% 2.8%
4Q24 17.2% 42.4% 18.8%10.4%7.0% Mopeds 4Q24 62.4% 35.0% 2.7%
Exhibit 12: Motorcycles vs scooters vs

1Q25 16.8% 43.7% 19.4%10.0%6.4% 1Q25 62.4% 35.2% 2.4%

2Q25 17.2% 42.3% 21.1% 9.6%6.4% 2Q25 60.5% 36.9% 2.6%

Exhibit 14: Domestic motorcycles – OEM

Royal Enfield
3Q25 16.8% 42.6% 19.3%10.0%8.0% 3Q25 60.6% 36.7% 2.6%

20%
40%
60%
80%
10%
20%
30%
40%
50%
60%
70%
80%
90%

0%
0%

100%
100%

HMSI
1Q21 50% 24% 7%12% 0% 1Q21 25.8% 53.4% 20.8%
2Q21 53% 19% 10%10% 0% 2Q21 25.2% 53.8% 21.0%

Bajaj Auto
Source: SIAM, HSBC
Source: SIAM, HSBC

3Q21 51% 21% 11% 11% 0% 3Q21 24.8% 53.1% 22.2%

4Q21 52% 20% 12% 9% 0% 4Q21 21.0% 54.8% 24.2%
market share
Economy
Quarterly trends for the two-wheeler industry

1Q22 44% 20% 19% 10%0% 1Q22 20.9% 57.2% 21.9%

TVS
2Q22 52% 18% 12% 7% 0% 2Q22 24.1% 59.3% 16.6%
share by segment

Yamaha
3Q22 46% 23% 13% 7% 0% 3Q22 22.6% 55.7% 21.6%
4Q22 45% 22% 14% 6%1% 4Q22 17.7% 60.4% 21.9%
1Q23 43% 23% 13% 6%2% 1Q23 18.1% 63.7% 18.2%
2Q23 47% 22% 11%6%1% 2Q23 17.3% 59.6% 23.1%
Executive

Ola
3Q23 41% 21% 13% 8% 4% 3Q23 15.5% 60.0% 24.4%

Suzuki
4Q23 39% 23% 14% 6% 4% 4Q23 13.3% 62.1% 24.5%
OEM Market share remains range bound

1Q24 41% 22% 13% 6% 5% 1Q24 17.1% 59.8% 23.0%

2Q24 42% 23% 14% 6% 3% 2Q24 15.2% 60.9% 23.9%
Premium segment share recover by 70bp in 3Q

3Q24 39% 23% 14% 8% 5% 3Q24 17.5% 58.4% 24.1%

Exhibit 15: Domestic scooters: OEM

4Q24 37% 23% 15% 6% 7% 4Q24 14.2% 60.4% 25.4%

Premium

1Q25 44% 21% 14%5% 6% 1Q25 14.6% 61.0% 24.4%

HMCL
Others
2Q25 40% 24% 13%5% 5% 2Q25 14.3% 62.5% 23.1%
Exhibit 13: Domestic motorcycles: market

3Q25 36% 26% 14% 5% 5% 3Q25 14.6% 61.6% 23.8%

29 January 2025
Equities ● Automobiles

9
 Equities ● Automobiles
29 January 2025

Exhibit 16: Bajaj and TVS export markets

Share of exports to LatAm improved, for both the OEMs, at the expense of Africa’s share
Bajaj Export market share TVS Export market share
FY20 FY21 FY22 FY23 FY24 Apr-Dec 24 FY20 FY21 FY22 FY23 FY24 Apr-Dec 24
Mexico 2.6% 4.8% 5.2% 8.9% 13.8% 20.6% Guinea 12.2% 13.3% 11.6% 12.7% 15.7% 14.9%
Nigeria 32.2% 25.4% 25.5% 17.1% 13.7% 10.7% Nigeria 22.0% 22.8% 18.9% 12.3% 13.3% 8.3%
Colombia 11.2% 7.6% 10.4% 11.1% 8.9% 11.7% Tanzania 3.7% 2.8% 5.2% 8.4% 8.1% 7.6%
Uganda 5.2% 5.9% 6.7% 8.3% 7.5% 8.0% Colombia 2.9% 6.1% 8.4% 7.9% 7.6% 8.6%
Argentina 1.1% 3.1% 3.3% 3.0% 4.6% 1.2% Congo 9.1% 7.9% 9.1% 10.2% 6.0% 7.2%
Austria 3.8% 7.1% 6.0% 6.6% 4.6% 1.1% Guatemala 1.3% 2.1% 2.7% 2.5% 3.7% 3.9%
Guatemala 2.7% 3.7% 3.1% 3.3% 4.5% 5.4% Brazil 0.3% 0.2% 0.6% 4.8% 3.6% 5.7%
Turkey 0.2% 0.5% 0.5% 1.6% 4.3% 1.7% Senegal 0.2% 0.5% 0.3% 2.1% 3.5% 2.7%
United States 1.0% 2.2% 1.7% 3.3% 3.8% 0.7% Nepal 2.6% 3.8% 5.2% 4.1% 3.4% 5.2%
Congo 2.9% 3.2% 4.6% 4.5% 3.1% 3.1% Djibouti 0.0% 0.0% 0.0% 1.0% 3.4% 3.2%
Tanzania 1.7% 1.3% 1.7% 2.7% 2.6% 2.5% United Arab Emirates 0.4% 0.7% 1.2% 1.8% 3.0% 0.6%
United Kingdom 0.0% 0.3% 0.5% 0.7% 2.5% 3.6% Kenya 11.7% 10.9% 7.8% 5.2% 3.0% 2.9%
Peru 1.8% 3.2% 1.8% 2.1% 2.3% 3.3% Togo 0.0% 0.0% 0.0% 1.9% 2.9% 1.9%
Djibouti 0.1% 0.5% 0.6% 1.7% 2.0% 1.5% Honduras 0.6% 0.6% 1.1% 1.4% 2.3% 2.5%
Nepal 7.6% 5.9% 5.5% 1.9% 1.9% 3.2% Sierra Leone 3.4% 4.6% 3.0% 1.8% 1.9% 2.4%
Honduras 0.8% 0.8% 1.2% 1.6% 1.7% 1.7% Mexico 0.5% 0.1% 0.4% 1.2% 1.8% 4.8%
Ecuador 1.2% 1.0% 1.0% 1.2% 1.3% 0.8% Liberia 1.6% 2.7% 2.8% 1.6% 1.7% 1.6%
Nicaragua 0.3% 0.8% 0.8% 0.5% 1.1% 1.6% Rwanda 1.4% 1.4% 0.8% 1.4% 1.3% 1.3%
Dominican Republic 0.8% 0.8% 0.8% 0.8% 1.1% 1.5% Cameroon 1.5% 1.1% 0.5% 1.0% 1.2% 2.0%
Saudi Arabia 0.1% 0.1% 0.2% 0.4% 0.9% 2.4% Indonesia 0.2% 0.0% 0.1% 1.3% 1.1% 0.3%
Kenya 4.3% 5.9% 4.0% 3.1% 0.8% 0.8% Dominican Republic 0.3% 0.1% 0.4% 0.8% 1.1% 1.3%
United Arab Emirates 0.9% 0.9% 1.2% 1.3% 0.8% 1.3% Uganda 1.0% 1.2% 1.3% 0.9% 1.1% 0.3%
Somalia 0.0% 0.0% 0.0% 0.4% 0.7% 0.0% Gambia 0.1% 0.2% 0.3% 0.3% 0.7% 0.5%
Germany 0.0% 0.1% 0.0% 0.3% 0.6% 0.0% Mozambique 0.2% 0.3% 0.4% 0.5% 0.6% 0.6%
Japan 0.6% 0.6% 0.5% 0.9% 0.6% 0.4% Angola 0.1% 0.2% 0.1% 1.2% 0.6% 1.0%
Canada 0.0% 0.1% 0.2% 0.5% 0.6% 0.1% Benin 0.8% 0.6% 0.8% 0.4% 0.5% 0.6%
Bolivia 0.3% 0.5% 0.4% 0.6% 0.6% 0.3% Turkey 0.2% 0.3% 0.0% 1.8% 0.5% 0.0%
Australia 0.2% 0.5% 0.6% 0.6% 0.6% 0.4% Nicaragua 0.0% 0.0% 0.3% 0.2% 0.5% 0.6%
Russia 0.3% 0.4% 0.4% 0.6% 0.5% 0.5% Lebanon 0.1% 0.0% 0.2% 1.3% 0.5% 0.1%
Cameroon 0.6% 0.5% 0.4% 0.5% 0.5% 0.6% Saudi Arabia 0.0% 0.0% 0.0% 0.1% 0.5% 0.9%
84.5% 87.9% 88.9% 90.3% 92.5% 90.8% 78.1% 84.6% 83.6% 92.1% 95.3% 93.5%

Africa 47.0% 42.8% 43.5% 38.3% 30.9% 27.3% Africa 69.2% 70.6% 63.3% 63.7% 66.9% 60.3%
LATAM 22.6% 26.4% 28.0% 33.2% 39.9% 48.1% LATAM 5.6% 9.2% 13.6% 18.0% 19.4% 26.2%
ASIA 9.6% 7.8% 7.8% 5.1% 4.7% 7.8% ASIA 3.3% 4.9% 6.7% 10.4% 9.0% 7.1%
Europe 4.0% 8.0% 7.1% 9.1% 12.0% 6.4% Other 21.9% 15.4% 16.4% 7.9% 4.7% 6.5%
Others 16.7% 15.0% 13.6% 14.2% 12.4% 10.4%
Source: Ministry of Commerce, HSBC

10
 Equities ● Automobiles
29 January 2025

Exhibit 17: Commodity price index for 2Ws

Commodity cost increased by 3% q-o-q during the quarter and spot prices further moved up by 3% from 3Q25 implying c60-70bp
margin headwinds.
200 185
173 177 169 172
180
157
151 148 153
160 146 142 146 150
136 140 136 139 138
140
120 118
115 118 115
120 110 110 108
105 107 108 104
100

80

Spot
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
1Q25
2Q25
3Q25
Commodity price index for 2Ws
Source: Bloomberg, HSBC Research

Exhibit 18: Bajaj Auto currently trades at 16% premium to its 5-year average P/E multiple

40 12 month forward PE
35

30
(x)

25

20

15

10
Jan-20
Mar-20
May-20

Nov-20
Jan-21
Mar-21
May-21

Nov-21
Jan-22
Mar-22
May-22

Nov-22
Jan-23
Mar-23
May-23

Nov-23
Jan-24
Mar-24
May-24

Nov-24
Jul-20
Sep-20

Jul-21
Sep-21

Jul-22
Sep-22

Jul-23
Sep-23

Jul-24
Sep-24
BJAUT IN EQUITY 5 year average of 12 month forward PE

Source: Bloomberg, HSBC Research

Exhibit 19: TVS Motor currently trades at 8% premium to its 5-year average P/E multiple

50 12 month forward PE

40

30
(x)

20

10

-
Mar-20
May-20

Nov-20

May-21

Nov-21

May-22

Nov-22
Jan-20

Jan-21
Mar-21

Jan-22
Mar-22

Jan-23
Mar-23
May-23

Nov-23

Mar-24
May-24

Nov-24
Jan-24
Jul-20
Sep-20

Jul-21
Sep-21

Jul-22
Sep-22

Jul-23
Sep-23

Jul-24
Sep-24

TVSL IN EQUITY 5 year average

Source: Bloomberg, HSBC Research

11
 Equities ● Automobiles
29 January 2025

Valuation and risks

Valuation Risks
Current price: Investment thesis: We retain our Buy on Bajaj, thanks to a diversified earnings profile Downside risks: 1) Weakness in
Bajaj Autos
INR8,398.40 and reasonable valuations post the recent stock correction. CNG traction has been exports to key African markets
BJAUT IN disappointing, but the company continues to do well in EVs and export volumes are extending much longer than 1HFY24,
Target price:
gradually improving as well. Impending launch of e-Rickshaw is an upside trigger. which could lead to further
INR10,500.00
Valuation: We value Bajaj Auto’s core business using a long-term DCF methodology. downgrades to earnings estimates; 2)
Buy Up/downside: increasing competition in the premium
Our DCF inputs are based on HSBC strategists’ assumptions for India, including a
+25.0% segment; 3) volatility in export
WACC of 10.39%, based on a risk-free rate of 3.75%, a market premium of 5.75%, an
inflation differential of 1.75%, and a beta of 0.85, in line with last 1-year average. We markets; and 4) significant fluctuation
use terminal growth rate of 6.0% (earlier 6.5%). We add Bajaj’s stake (36.6%) in PMAG in key export market currencies in this
at INR138 per share (unchanged), EUR to INR FX rate of INR93.00 and continue to uncertain environment.
reflect a 20% holding company discount (due to intercompany transactions). Unless
otherwise noted, our inputs remain unchanged. The reduction in long-term growth rate
leads to the change in our target price.
Our target price is INR10,500 (earlier INR11,500), implying c25% upside from the current
share price. We believe the risk-reward dynamic is still favourable, and we view Bajaj as
a more defensive company than peers given its strong export portfolio and balance
sheet. Hence, we retain our Buy rating on the stock.

Current price: Investment Thesis. TVS has done well across business units and showcased strong Downside risks: 1) a higher-than-
TVS Motors
INR2,335.80 execution abilities, in our view. The company has been able to maintain share in the expected impact on rural markets due
TVSL IN domestic motorcycle and scooter market and has gained decent traction in EVs as well. to macro weakness; 2) a higher-than-
Target price:
TVS continues to gain traction in export markets as well. Despite the losses in expected competitive intensity
INR2,800.00
Buy (Upgrade subsidiaries, on a standalone basis valuations now look tempting to us. (especially pricing and market share
Up/downside: losses); 3) and a prolonged slowdown
from Hold) Valuation. We value the core TVS Motor business using a DCF methodology. Our DCF
+19.9% in export markets and increase in
assumptions for TVS Motors are based on HSBC strategists’ latest assumptions for
India. We assume a WACC of 10.7%, based on a risk-free rate of 3.75%, a market commodity prices.
premium of 5.75%, an inflation differential of 1.75%, a beta of 0.85 in line with Bajaj Auto
(all unchanged). We use terminal growth rate of 6% (unchanged). Our valuation for the
standalone business is INR2,660 (unchanged). We also add our fair value of TVS Credit
Services (private) of INR129 per share (unchanged), which is based on the last deal
valuation at which Premji Invest acquired the 9.7% stake in TVS Credit. We incorporate
the acquisition of SEMG (which is a 100% subsidiary) and value the investment at
booked cost of cINR6.7bn, or INR14 per share (unchanged).
Our unchanged target price of INR2,800 implies c20% upside from current levels. We
expect 2W demand to normalise in FY26 on high base. We concur with management that
a good monsoon season may produce a rural demand recovery, and we believe that new
launches will help the company defend its market share. As such, we upgrade to Buy
from Hold on this stock.

Current price: Investment Thesis. Since the IPO, OLA has consistently disappointed on volumes, largely led Upside risks: 1) Successful
Ola Electric
INR65.16 by quality and service issues. While peak issues with the previous platform are behind now reception of Ola’s upcoming products
OLAELEC IN and there is impending trigger of motorcycle launch by OLA, our confidence on medium to – motorcycles/ gig scooters etc. by
Target price:
long-term estimates is low now, leading us to downgrade the stock the market; 2) Cell business
INR70.00
Hold Valuation. We value Ola using a 10-year DCF model. Our WACC assumption of 10.0% achieving scale of operations and
Up/downside:
(Downgrade is based on HSBC strategists’ assumptions for India, including a risk-free rate of 3.75%, thus reducing the battery cost for the
+7.4%
from Buy) market risk premium of 5.75%, an inflation differential of 1.75%, a company-specific beta company
of 0.75 (earlier 0.85) lower than Bajaj Auto due to slowing market share gain, and a cost Key downside risks: 1) Slower-
of debt of 7.0%. We also lower terminal growth rate to 6.0% (from 7.5%). Unless than-expected penetration of e2Ws;
otherwise noted, all inputs remain unchanged. 2) Battery plant issues, including
We cut our estimates to account for weaker-than-expected penetration in e2W and Ola’s failure to expand capacity, change in
lower than estimates wholesale in 3Q. With strong competition from other OEMs, it seems battery technology, unable to attain
unlikely that Ola will recover to the market share levels it saw in 1QFY25 and might stay at significant yield etc.; 3) Loss of
current levels. We cut our target price to INR70 (from INR100), implying c7% upside from market share due to increasing
current levels. We downgrade our rating from Buy to Hold on the stock, given our lower competition and launch of vehicles by
confidence on company estimates. other OEMs (for instance a launch of
an EV by Honda);

Priced at 28 January 2025

Source: HSBC estimates

12
 Equities ● Automobiles
29 January 2025

Financials & valuation: Bajaj Auto Buy

Financial statements Valuation data

Year to 03/2024a 03/2025e 03/2026e 03/2027e Year to 03/2024a 03/2025e 03/2026e 03/2027e
Profit & loss summary (INRm) EV/sales 4.7 4.1 3.6 3.2
Revenue 446,852 506,795 580,320 638,987 EV/EBITDA 23.7 20.5 17.4 15.5
EBITDA 88,229 101,860 119,031 132,257 EV/IC 1305.9 436.1
Depreciation & amortisation -3,498 -3,851 -4,352 -4,792 PE* 31.4 27.7 23.6 21.3
Operating profit/EBIT 84,731 98,009 114,679 127,465 PB 9.4 8.9 8.2 7.7
Net interest 13,490 13,660 15,962 17,394 FCF yield (%) 2.8 2.7 3.4 3.8
PBT 98,220 109,556 130,641 144,859 Dividend yield (%) 1.0 2.9 3.3 3.8
HSBC PBT 98,220 111,668 130,641 144,859 * Based on HSBC EPS (diluted)
Taxation -23,432 -27,115 -31,354 -34,766
Net profit 74,788 82,441 99,287 110,093
HSBC net profit 74,788 84,553 99,287 110,093 ESG metrics
Cash flow summary (INRm) Environmental Indicators 03/2024a Governance Indicators 03/2024a
Cash flow from operations 74,783 69,753 89,299 98,861 GHG emission intensity* n/a No. of board members 16
Capex -8,109 -7,344 -8,427 -9,279 Energy intensity* n/a Average board tenure (years) 9.2
Cash flow from investment -1,392 6,925 7,935 8,515 CO2 reduction policy Yes Female board members (%) 12.5
Dividends -39,602 -67,003 -78,170 -89,338 Social Indicators 03/2024a Board members independence (%) 50
Change in net debt -7,110 -9,065 -18,663 -17,638
FCF equity 66,674 62,409 80,872 89,582 Employee costs as % of revenues 3.4
Balance sheet summary (INRm) Employee turnover (%) n/a
Diversity policy Yes
Intangible fixed assets 119 119 119 119
Tangible fixed assets 31,868 35,361 39,435 43,922 Source: Company data, HSBC
Current assets 103,572 113,669 137,968 160,087 * GHG intensity and energy intensity are measured in kg and kWh respectively against revenue in USD ‘000s
Cash & others 54,161 63,226 81,889 99,527
Total assets 342,507 356,097 384,470 411,076
Operating liabilities 90,753 86,793 94,050 99,901 Issuer information
Gross debt 0 0 0 0 Share price (INR) 8398.40 Free float 40%
Net debt -54,161 -63,226 -81,889 -99,527 Target price (INR) 10500.00 Sector Autos
Shareholders' funds 248,605 264,042 285,159 305,914 RIC (Equity) BAJA.BO Country/Region India
Invested capital -9,355 -870 1,583 4,700
Bloomberg (Equity) BJAUT IN Analyst Yogesh Aggarwal
Market cap (USDm) 27,086 Contact +91 22 2268 1246
Ratio, growth and per share analysis
Year to 03/2024a 03/2025e 03/2026e 03/2027e
Price relative
Y-o-y % change
Revenue 22.7 13.4 14.5 10.1
EBITDA 34.7 15.4 16.9 11.1 12300.00 12300.00
Operating profit 35.2 15.7 17.0 11.1
10300.00 10300.00
PBT 32.6 11.5 19.2 10.9
HSBC EPS 34.7 13.1 17.4 10.9 8300.00 8300.00
Ratios (%)
6300.00 6300.00
Revenue/IC (x) 167.1 -99.1 1628.2 203.4
ROIC 2411.9 -1442.5 24452.6 3083.7 4300.00 4300.00
ROE 29.7 33.0 36.2 37.3 2300.00 2300.00
ROA 23.0 23.7 26.9 27.8 01/23 07/23 12/23 06/24 12/24
EBITDA margin 19.7 20.1 20.5 20.7 Bajaj Auto Rel to BOMBAY SE SENSITIVE INDEX
Operating profit margin 19.0 19.3 19.8 19.9
EBITDA/net interest (x) Source: HSBC
Net debt/equity -21.8 -23.9 -28.7 -32.5 Note: Priced at close of 28 Jan 2025
Net debt/EBITDA (x) -0.6 -0.6 -0.7 -0.8
CF from operations/net debt
Per share data (INR)
EPS Rep (diluted) 267.9 295.3 355.6 394.3
HSBC EPS (diluted) 267.9 302.9 355.6 394.3
DPS 80.0 240.0 280.0 320.0
Book value 890.5 945.8 1021.4 1095.8

13
 Equities ● Automobiles
29 January 2025

Financials & valuation: TVS Motor Buy

Financial statements Valuation data

Year to 03/2024a 03/2025e 03/2026e 03/2027e Year to 03/2024a 03/2025e 03/2026e 03/2027e
Profit & loss summary (INRm) EV/sales 3.3 2.9 2.5 2.2
Revenue 317,764 358,444 403,070 449,849 EV/EBITDA 29.8 24.0 19.7 16.3
EBITDA 35,141 43,326 51,593 59,830 EV/IC 68.9 48.9 50.1 59.2
Depreciation & amortisation -7,004 -7,464 -8,868 -9,897 PE* 53.3 42.6 35.0 29.8
Operating profit/EBIT 28,138 35,863 42,725 49,933 PB 14.4 11.2 8.8 7.0
Net interest -331 -696 -293 -109 FCF yield (%) 2.3 1.9 3.1 3.8
PBT 27,807 35,167 42,432 49,824 Dividend yield (%) 0.4 0.4 0.4 0.4
HSBC PBT 27,807 35,167 42,432 49,824 * Based on HSBC EPS (diluted)
Taxation -6,977 -9,104 -10,693 -12,556
Net profit 20,830 26,063 31,739 37,268
HSBC net profit 20,830 26,063 31,739 37,268 ESG metrics
Cash flow summary (INRm) Environmental Indicators 03/2024a Governance Indicators 03/2024a
Cash flow from operations 36,173 34,585 44,349 50,904 GHG emission intensity* 18.2 No. of board members 12
Capex -10,888 -13,262 -10,480 -8,997 Energy intensity* 42.5 Average board tenure (years) n/a
Cash flow from investment -18,963 -28,262 -19,480 -15,997 CO2 reduction policy Yes Female board members (%) 16.7
Dividends -3,801 -4,276 -4,276 -4,276 Social Indicators 03/2024a Board members independence (%) 50
Change in net debt -10,201 -716 -19,499 -29,721
FCF equity 25,285 21,323 33,869 41,907 Employee costs as % of revenues 5
Balance sheet summary (INRm) Employee turnover (%) 2.5
Diversity policy Yes
Intangible fixed assets 3,297 3,297 3,297 3,297
Tangible fixed assets 34,422 40,220 41,833 40,933 Source: Company data, HSBC
Current assets 42,178 46,162 67,488 99,243 * GHG intensity and energy intensity are measured in kg and kWh respectively against revenue in USD ‘000s
Cash & others 5,310 4,025 21,525 49,246
Total assets 160,622 177,405 207,343 245,198
Operating liabilities 59,367 64,362 70,837 77,700 Issuer information
Gross debt 15,134 13,134 11,134 9,134 Share price (INR) 2335.80 Free float 41%
Net debt 9,825 9,109 -10,390 -40,112 Target price (INR) 2800.00 Sector Autos
Shareholders' funds 77,310 99,097 126,561 159,553 RIC (Equity) TVSM.BO Country/Region India
Invested capital 15,220 21,292 20,255 16,526
Bloomberg (Equity) TVSL IN Analyst Yogesh Aggarwal
Market cap (USDm) 12,840 Contact +91 22 2268 1246
Ratio, growth and per share analysis
Year to 03/2024a 03/2025e 03/2026e 03/2027e
Price relative
Y-o-y % change
Revenue 20.5 12.8 12.4 11.6
EBITDA 31.4 23.3 19.1 16.0
2720.00 2720.00
Operating profit 37.7 27.5 19.1 16.9
PBT 38.8 26.5 20.7 17.4 2220.00 2220.00
HSBC EPS 39.7 25.1 21.8 17.4
Ratios (%) 1720.00 1720.00
Revenue/IC (x) 17.3 19.6 19.4 24.5
1220.00 1220.00
ROIC 115.0 145.6 153.8 203.1
ROE 30.2 29.5 28.1 26.1 720.00 720.00
ROA 14.8 16.0 16.9 16.8 01/23 07/23 12/23 06/24 12/24
EBITDA margin 11.1 12.1 12.8 13.3 TVS Motor Rel to BOMBAY SE SENSITIVE INDEX
Operating profit margin 8.9 10.0 10.6 11.1
EBITDA/net interest (x) 106.2 62.3 175.9 547.1 Source: HSBC
Net debt/equity 12.7 9.2 -8.2 -25.1 Note: Priced at close of 28 Jan 2025
Net debt/EBITDA (x) 0.3 0.2 -0.2 -0.7
CF from operations/net debt 368.2 379.7
Per share data (INR)
EPS Rep (diluted) 43.8 54.9 66.8 78.4
HSBC EPS (diluted) 43.8 54.9 66.8 78.4
DPS 9.0 9.0 9.0 9.0
Book value 162.7 208.6 266.4 335.8

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 Equities ● Automobiles
29 January 2025

Financials & valuation: Ola Electric Mobility Hold

Financial statements Valuation data

Year to 03/2024a 03/2025e 03/2026e 03/2027e Year to 03/2024a 03/2025e 03/2026e 03/2027e
Profit & loss summary (INRm) EV/sales 5.6 5.4 4.5 3.2
Revenue 50,098 48,110 62,055 94,171 EV/EBITDA nm nm nm 71.0
EBITDA -12,676 -10,482 -1,080 4,238 EV/IC 8.8 5.0 4.2 3.3
Depreciation & amortisation -3,576 -5,470 -6,107 -6,946 PE* nm nm nm nm
Operating profit/EBIT -16,252 -15,952 -7,187 -2,709 PB 11.8 4.7 5.2 5.3
Net interest -1,866 -1,728 -1,890 -2,079 FCF yield (%) 2.0 4.5 6.8 11.7
PBT -15,844 -13,941 -5,878 -1,188 Dividend yield (%) 0.0 0.0 0.0 0.0
HSBC PBT -15,844 -13,941 -5,878 -1,188 * Based on HSBC EPS (diluted)
Taxation 0 0 0 178
Net profit -15,844 -13,941 -5,878 -1,010
HSBC net profit -15,844 -13,941 -5,878 -1,010 ESG metrics
Cash flow summary (INRm) Environmental Indicators 03/2024a Governance Indicators 03/2024a
Cash flow from operations -6,331 -9,908 -85 4,340 GHG emission intensity* n/a No. of board members 6
Capex 11,906 22,232 18,533 27,600 Energy intensity* n/a Average board tenure (years) 2.8
Cash flow from investment -11,272 -22,232 -18,533 -27,600 CO2 reduction policy Yes Female board members (%) 16.7
Dividends 0 0 0 0 Social Indicators 03/2024a Board members independence (%) 33.3
Change in net debt 10,931 -22,861 18,618 23,260
FCF equity 5,575 12,324 18,448 31,940 Employee costs as % of revenues n/a
Balance sheet summary (INRm) Employee turnover (%) n/a
Diversity policy Yes
Intangible fixed assets 9,781 13,091 17,040 19,397
Tangible fixed assets 26,729 42,226 52,622 73,065 Source: Company data, HSBC
Current assets 40,466 52,938 36,835 17,993 * GHG intensity and energy intensity are measured in kg and kWh respectively against revenue in USD ‘000s
Cash & others 16,889 31,850 15,032 -6,129
Total assets 77,354 108,634 106,876 110,834
Operating liabilities 28,181 24,255 24,656 25,377 Issuer information
Gross debt 27,104 19,204 21,004 23,104 Share price (INR) 65.16 Free float 16%
Net debt 10,215 -12,646 5,972 29,233 Target price (INR) 70.00 Sector Autos
Shareholders' funds 20,193 61,253 55,375 54,365 RIC (Equity) OLAE.NS Country/Region India
Invested capital 31,906 52,150 66,810 91,207
Bloomberg (Equity) OLAELEC IN Analyst Yogesh Aggarwal
Market cap (USDm) 3,151 Contact +91 22 2268 1246
Ratio, growth and per share analysis
Year to 03/2024a 03/2025e 03/2026e 03/2027e
Price relative
Y-o-y % change
Revenue 90.4 -4.0 29.0 51.8 155.00 155.00
EBITDA
Operating profit 135.00 135.00
PBT
HSBC EPS 115.00 115.00
Ratios (%) 95.00 95.00
Revenue/IC (x) 1.8 1.1 1.0 1.2
ROIC -58.9 -38.0 -12.1 -2.9 75.00 75.00
ROE -72.4 -34.2 -10.1 -1.8 55.00 55.00
ROA -21.0 -13.1 -3.7 0.7 01/23 07/23 12/23 06/24 12/24
EBITDA margin -25.3 -21.8 -1.7 4.5 Ola Electric Mobility Rel to BOMBAY SE SENSITIVE INDEX
Operating profit margin -32.4 -33.2 -11.6 -2.9
EBITDA/net interest (x) 2.0 Source: HSBC
Net debt/equity 50.6 -20.6 10.8 53.8 Note: Priced at close of 28 Jan 2025
Net debt/EBITDA (x) -0.8 1.2 -5.5 6.9
CF from operations/net debt 14.8
Per share data (INR)
EPS Rep (diluted) -4.34 -3.16 -1.33 -0.23
HSBC EPS (diluted) -4.34 -3.16 -1.33 -0.23
DPS 0.00 0.00 0.00 0.00
Book value 5.53 13.89 12.55 12.33

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 Equities ● Automobiles
29 January 2025

Disclosure appendix
Analyst Certification
The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s)
whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering
analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or
issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other
views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect
their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific
recommendation(s) or views contained in this research report: Yogesh Aggarwal, Vipul Agrawal, CFA and Vishal Goel, CFA

Important disclosures
Equities: Stock ratings and basis for financial analysis
HSBC and its affiliates, including the issuer of this report (“HSBC”) believes an investor's decision to buy or sell a stock should
depend on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations and that
investors utilise various disciplines and investment horizons when making investment decisions. Ratings should not be used or
relied on in isolation as investment advice. Different securities firms use a variety of ratings terms as well as different rating
systems to describe their recommendations and therefore investors should carefully read the definitions of the ratings used in
each research report. Further, investors should carefully read the entire research report and not infer its contents from the rating
because research reports contain more complete information concerning the analysts' views and the basis for the rating.

From 23rd March 2015 HSBC has assigned ratings on the following basis:
The target price is based on the analyst’s assessment of the stock’s actual current value, although we expect it to take six to 12
months for the market price to reflect this. When the target price is more than 20% above the current share price, the stock will
be classified as a Buy; when it is between 5% and 20% above the current share price, the stock may be classified as a Buy or a
Hold; when it is between 5% below and 5% above the current share price, the stock will be classified as a Hold; when it is between
5% and 20% below the current share price, the stock may be classified as a Hold or a Reduce; and when it is more than 20%
below the current share price, the stock will be classified as a Reduce.

Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation or resumption of coverage, change
in target price or estimates).

Upside/Downside is the percentage difference between the target price and the share price.

Prior to this date, HSBC’s rating structure was applied on the following basis:
For each stock we set a required rate of return calculated from the cost of equity for that stock’s domestic or, as appropriate,
regional market established by our strategy team. The target price for a stock represented the value the analyst expected the
stock to reach over our performance horizon. The performance horizon was 12 months. For a stock to be classified as Overweight,
the potential return, which equals the percentage difference between the current share price and the target price, including the
forecast dividend yield when indicated, had to exceed the required return by at least 5 percentage points over the succeeding 12
months (or 10 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock was
expected to underperform its required return by at least 5 percentage points over the succeeding 12 months (or 10 percentage
points for a stock classified as Volatile*). Stocks between these bands were classified as Neutral.

*A stock was classified as volatile if its historical volatility had exceeded 40%, if the stock had been listed for less than 12 months
(unless it was in an industry or sector where volatility is low) or if the analyst expected significant volatility. However, stocks which
we did not consider volatile may in fact also have behaved in such a way. Historical volatility was defined as the past month's
average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating, however,
volatility had to move 2.5 percentage points past the 40% benchmark in either direction for a stock's status to change.

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 Equities ● Automobiles
29 January 2025

Rating distribution for long-term investment opportunities

As of 31 December 2024, the distribution of all independent ratings published by HSBC is as follows:
Buy 55% (13% of these provided with Investment Banking Services in the past 12 months)
Hold 39% (12% of these provided with Investment Banking Services in the past 12 months)
Sell 7% (6% of these provided with Investment Banking Services in the past 12 months)
For the purposes of the distribution above the following mapping structure is used during the transition from the previous to current rating
models: under our previous model, Overweight = Buy, Neutral = Hold and Underweight = Sell; under our current model Buy = Buy, Hold
= Hold and Reduce = Sell. For rating definitions under both models, please see “Stock ratings and basis for financial analysis” above.

For the distribution of non-independent ratings published by HSBC, please see the disclosure page available at
http://www.hsbcnet.com/gbm/financial-regulation/investment-recommendations-disclosures.

Share price and rating changes for long-term investment opportunities

Bajaj Auto (BAJA.BO) share price performance INR Vs Rating & target price history
HSBC rating history
From To Date Analyst
Buy Hold 24 Jul 2023 Yogesh Aggarwal
13935 Hold Buy 25 Jan 2024 Yogesh Aggarwal
Target price Value Date Analyst
11935
Price 1 4500 20 Jul 2022 Yogesh Aggarwal
9935 Price 2 4100 17 Oct 2022 Yogesh Aggarwal
Price 3 4200 27 Jan 2023 Yogesh Aggarwal
7935 Price 4 4400 06 Apr 2023 Yogesh Aggarwal
Price 5 4800 26 Apr 2023 Yogesh Aggarwal
5935 Price 6 5400 06 Jul 2023 Yogesh Aggarwal
Price 7 6900 15 Dec 2023 Yogesh Aggarwal
3935 Price 8 8600 25 Jan 2024 Yogesh Aggarwal
Price 9 9400 13 Feb 2024 Yogesh Aggarwal
1935
Price 10 10500 08 Apr 2024 Yogesh Aggarwal
Jan-20

Jan-21

Jan-22

Jan-23

Jan-24

Jan-25

Price 11 11000 08 Jul 2024 Yogesh Aggarwal

Price 12 14000 18 Sep 2024 Yogesh Aggarwal
Source: HSBC Price 13 11500 06 Jan 2025 Yogesh Aggarwal
Source: HSBC
Ola Electric Mobility (OLAE.NS) share price Rating & target price history
performance INR Vs HSBC rating history
From To Date Analyst
N/A Buy 15 Aug 2024 Yogesh Aggarwal
145 Target price Value Date Analyst
135 Price 1 140.00 15 Aug 2024 Yogesh Aggarwal
Price 2 110.00 25 Oct 2024 Yogesh Aggarwal
125
Price 3 100.00 06 Jan 2025 Yogesh Aggarwal
115 Source: HSBC
105
95
85
75
65
Jan-20

Jan-21

Jan-22

Jan-23

Jan-24

Jan-25

Source: HSBC

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 Equities ● Automobiles
29 January 2025

TVS Motor (TVSM.BO) share price performance INR Vs Rating & target price history
HSBC rating history
From To Date Analyst
Buy Hold 25 Jan 2024 Yogesh Aggarwal
Target price Value Date Analyst
2752
Price 1 730.00 08 Feb 2022 Vivek Gedda
2252 Price 2 750.00 17 May 2022 Yogesh Aggarwal
Price 3 980.00 20 Jul 2022 Yogesh Aggarwal
1752 Price 4 1300.00 07 Nov 2022 Yogesh Aggarwal
Price 5 1500.00 27 Jun 2023 Yogesh Aggarwal
1252
Price 6 1700.00 04 Oct 2023 Yogesh Aggarwal
Price 7 1800.00 31 Oct 2023 Yogesh Aggarwal
Price 8 2300.00 15 Dec 2023 Yogesh Aggarwal
752
Price 9 2400.00 07 Aug 2024 Yogesh Aggarwal
Price 10 2800.00 18 Sep 2024 Yogesh Aggarwal
252
Source: HSBC
Jan-20

Jan-21

Jan-22

Jan-23

Jan-24

Jan-25
Source: HSBC

To view a list of all the independent fundamental ratings/recommendations disseminated by HSBC during the preceding 12-month
period, and the location where we publish our quarterly distribution of non-fundamental recommendations (applicable to Fixed
Income and Currencies research only), please use the following links to access the disclosure page:

Clients of HSBC Private Banking: www.research.privatebank.hsbc.com/Disclosures

All other clients: www.research.hsbc.com/A/Disclosures

HSBC & Analyst disclosures

Disclosure checklist

Company Ticker Recent price Price date Disclosure

BAJAJ AUTO BAJA.BO 8398.40 28 Jan 2025 7
OLA ELECTRIC MOBILITY OLAE.NS 65.16 28 Jan 2025 –
TVS MOTOR TVSM.BO 2335.80 28 Jan 2025 6, 7
Source: HSBC

1 HSBC has managed or co-managed a public offering of securities for this company within the past 12 months.
2 HSBC expects to receive or intends to seek compensation for investment banking services from this company in the next 3
months.
3 At the time of publication of this report, HSBC Securities (USA) Inc. is a Market Maker in securities issued by this company.
4 As of 31 December 2024, HSBC beneficially owned 1% or more of a class of common equity securities of this company.
5 This company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid
compensation to HSBC in respect of investment banking services.
6 As of 30 November 2024, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of non-investment banking securities-related services.
7 As of 30 November 2024, this company was a client of HSBC or had during the preceding 12 month period been a client of
and/or paid compensation to HSBC in respect of non-securities services.
8 A covering analyst/s has received compensation from this company in the past 12 months.
9 A covering analyst/s or a member of his/her household has a financial interest in the securities of this company, as
detailed below.
10 A covering analyst/s or a member of his/her household is an officer, director or supervisory board member of this
company, as detailed below.
11 At the time of publication of this report, HSBC is a non-US Market Maker in securities issued by this company and/or in
securities in respect of this company.
12 As of 22 January 2025, HSBC beneficially held a net long position of more than 0.5% of this company’s total issued share
capital, calculated according to the SSR methodology.

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 Equities ● Automobiles
29 January 2025

13 As of 22 January 2025, HSBC beneficially held a net short position of more than 0.5% of this company’s total issued share
capital, calculated according to the SSR methodology.
14 HSBC Qianhai Securities Limited holds 1% or more of a class of common equity securities of this company.
HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments, both equity and debt
(including derivatives) of companies covered in HSBC Research on a principal or agency basis or act as a market maker or
liquidity provider in the securities/instruments mentioned in this report.

Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking,
sales & trading, and principal trading revenues.

Whether, or in what time frame, an update of this analysis will be published is not determined in advance.

Non-U.S. analysts may not be associated persons of HSBC Securities (USA) Inc, and therefore may not be subject to FINRA
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Additional disclosures
1 This report is dated as at 29 January 2025.
2 All market data included in this report are dated as at close 28 January 2025, unless a different date and/or a specific time
of day is indicated in the report.
3 HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its
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Production & distribution disclosures

1. This report was produced and signed off by the author on 29 Jan 2025 02:19 GMT.

2. In order to see when this report was first disseminated please see the disclosure page available at
https://www.research.hsbc.com/R/34/f7HpgJG

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 Equities ● Automobiles
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India Research Team
Head of Research, India IT Services, Internet and Autos
Yogesh Aggarwal +91 22 2268 1246
[email protected] Head of Research, India
Yogesh Aggarwal +91 22 2268 1246
[email protected]
Banks/Financials
Analyst Analyst
Abhishek Murarka +91 96 1996 4653 Vipul Agrawal, CFA +91 97 6905 1842
[email protected] [email protected]
Analyst
Analyst, India Financials
Vishal Goel, CFA +91 80 6737 2115
Rahil Shah +91 22 6628 3719
[email protected]
[email protected]
Analyst
Construction & Engineering Prateek Maheshwari +91 98 1937 0718
Analyst [email protected]
Prateek Maheshwari +91 98 1937 0718 Analyst
[email protected] Sagar Desai +91 83 6919 9927
[email protected]
Analyst
Sagar Desai +91 83 6919 9927
[email protected] Oil & Gas
Analyst
Healthcare Puneet Gulati, CFA +91 22 2268 1235
[email protected]
Analyst
Damayanti Kerai +91 88 7933 5196 Analyst
[email protected] Saurabh Jain +91 22 6164 0691
[email protected]
Associate
Gaurang Sakare +91 77 1883 6255
[email protected] Real Estate
Analyst
Infrastructure, Capital Goods and Puneet Gulati, CFA +91 22 2268 1235
[email protected]
Consumer Durables
Analyst Analyst
Shrinidhi Karlekar +91 22 6164 0689 Saurabh Jain +91 22 6164 0691
[email protected] [email protected]

Analyst Telecom, Media

Sandesh Shetty +91 89 8338 6423
[email protected] Head of ASEAN Internet and Telecoms
Piyush Choudhary, CFA +65 6658 0607
Analyst [email protected]
Puneet Garg +91 80 4555 2756
Analyst
[email protected]
Rishabh Dhancholia +91 80 3001 2841
[email protected]

Utilities
Analyst
Puneet Gulati, CFA +91 22 2268 1235
[email protected]