TVS Motor Company has received an investment-grade ‘IND AAA/Stable‘ rating from India Ratings and Research for its proposed INR 5,000 million Non-Convertible Debentures (NCDs). The rating reflects TVSM’s strong market presence, diversified product mix across 2W segments, and robust financial health, marked by improving margins and low leverage. The outlook remains stable, despite inherent industry cyclicality and competition.
TVS Motor Receives Top Credit Rating for NCD Issuance
TVS Motor Company Limited (TVSM) has been assigned an investment-grade rating for its planned debt issuance. India Ratings and Research (Ind-Ra) has assigned a rating of ‘IND AAA/Stable‘ to the proposed INR 5,000 million Non-Convertible Debentures (NCDs), which are yet to be issued. This rating action, announced on March 4, 2026, affirms the high degree of safety regarding the timely servicing of financial obligations.
Key Rating Drivers: Strengths
The ‘IND AAA‘ rating is underpinned by several core strengths:
- Market Position: TVSM is a leading 2W manufacturer, holding the second-largest share in the domestic scooter segment and being the largest player in e-scooters (market share exceeding 23% as of 9MFY26).
- Diversification: The company maintains a diverse mobility portfolio spanning motorcycles, scooters, mopeds, and 3Ws, with a strong presence in over 60 countries.
- Operating Performance: Consolidated revenue (excluding finance arm) grew at a CAGR of 17% during FY20-FY25, with standalone EBITDA margins improving to 12.8% in 9MFY26.
- Financial Metrics: Strong credit profile characterized by low leverage; net adjusted leverage was below 1.0x in FY25, and the gross interest coverage stood at 16.2x in FY25.
Key Rating Drivers: Weaknesses
Areas tempering the rating include:
- Intense competition from other OEMs.
- Susceptibility to macro-economic headwinds.
- The overseas business continuing to be a drag on overall profitability and return ratios.
Rationale for Rating Stability
The rating reflects TVSM’s well-established market presence in the Indian 2W industry, supported by strong brands (like Jupiter, Ntorq, and Apache series). The company benefits from a premiumising product mix, derived 73% of volumes from motorcycles over 110 CC in FY25, and a robust liquidity position. The Return on Capital Employed (ROCE) improved significantly to 35% in FY25.
Liquidity Profile
Liquidity is assessed as Adequate. TVSM held INR 5.2 billion in unencumbered cash at FY25. Although Ind-Ra-calculated free cash flow was negative at INR 6.5 billion in FY25 due to large capex (INR 24.4 billion), internal accruals are expected to fund planned FY26 capex of INR 46 billion, including investments in the electric platform and subsidiaries. Debt repayments scheduled for FY26 are between INR 8 billion and INR 9 billion.
Standalone Performance Context
Standalone financials show strong growth, with revenue growing at a CAGR of 17% to INR 362.5 billion by FY25. Standalone net adjusted leverage remained robust at 0.3x in FY25, maintaining strong coverage.
Rating Sensitivities
A negative rating action could occur if there is a substantial weakening of market position, significant losses at subsidiaries, or if consolidated net leverage exceeds 1.5x on a sustained basis due to capex plans exceeding expectations.
Instrument Details
The NCDs are classified as a Long-term instrument with a complexity indicator of Low.
Source: BSE
