The first question is from the line of Chandramouli Muthiah from Goldman Sachs.

Congratulations on the favourable response to the Jupiter 110cc. First question is just product related. I think while Jupiter and Ntorq have had a good start to the festive season and good volumes for previous quarter. It appears that Raider 125 in the sports category seems to be moderating a little bit. So I just want to understand, is there any production-related issue there? Or are we considering sort of repositioning the product in light of recent competitor events?

Raider is a great brand. I don't see any challenges in Raider. We are pretty confident of the portfolio on Raider, and this is a brand which will do extremely well going forward. We are pretty confident on that.

Got it. That's helpful. Second question is on just festive season comments you made earlier in the prepared remarks. I think you mentioned that so far industry festive volume growth on your estimates is 11%. But you also mentioned sort of 3Q volume growth, I think it was 4%. I just want to understand where there is a contrast between those two numbers?

No, during the first nine days, we have seen a good growth. But after nine days, there are a few days now, there is a bit of slowdown, around 4% is the industry growth. So, I'm pretty confident that next one-week things will be improving. We have Dhanteras, we are all looking forward to that, okay. I am pretty confident that what is most important that TVS is doing extremely well, much, much better than the industry. Thanks to our portfolio and thanks to all the customers who are supporting.

Got it. That's helpful. Just lastly a clarification on the export and the spares revenue for the quarter, please?

Spares is about INR930 crores and exports revenue is INR2,229 for Q2.

Got it. Thank you very much and all the best.

The next question is from the line of Pramod Kumar from UBS. Please go ahead.

Thanks a lot for the opportunity. Sir wanted some more detail on the investments you're doing on the employee side because the reason why I ask that is, your employee cost is a good 25%, 26% higher than Bajaj, and just around 10%, 15% lower than Hero. And that given the size of the company in terms of market share and revenue, it's a significant investment what you're doing in the future. And you alluded to that in terms of software, EVs, other technologies. So, if you can just help us understand how much of the current employee bill, is roughly targeting towards these advanced investments, and what's the kind of IP what we've built within the organization? Because the choice is either to do it yourself or outsource it. So clearly your intention seems to be doing everything in-house in terms of lot of technology. So if you can just help us understand, because all this will kind of pay out in the future in terms of benefits, right? So if you can just help us understand how much is the steady-state ongoing legacy business expenses and what kind of investments which is going on the employee side?

So, first of all, Bajaj, and Hero, they are all role model companies, and I respect them as great competition, And I don't want to compare with competition. As TVS Motor, we have a strategy that we want to design, develop, and invest many of the technologies in-house. And last quarter also I highlighted that we have almost 250 software people and have about 250 digital. These are all assets where we have added to really, really look for the future, because you know the future is going to be electric, future is going to be many new technologies which are likely to come. So, we have to invest. We have to build that capability, and we have invested in that. And we will continue to invest in areas where future customers are going to look at us because we are completely focused on how the transition is going to happen in the industry.

Sir, any quantification as to ho w much of the wage bill is towa rds the advanced investments or towards software, digital?

We don't look at it that because these are all investments. When you look at the investment, I am very confident that this will pay back, will definitely pay back. Getting good quality resource is most important for us at this point of time. And 500 people we have added, I have given you the quantification.

And sir, with the kind of investments which you are making which are way out of the industry, you are still confident on maintaining the margin momentum going forward?

You have seen last several quarters we have been meeting the margin expectation, Our strategy continues. We want to give best to the customer. We want to focus on customer delight. You see the current Jupiter 110; you see the feature. We wi ll continue to delight the customer. That is strategy one. We want to grow the top-line ahead of the industry. And we will sincerely work on how do we improve the margin. Customers, volume, product mix, growth, cost reduction, I think these are all consistently we will look at and we will work on.

Great to hear that. Sir. On Jupiter, I believe it's a very big hit. Currently probably the only two- wheeler model which waitlisted in the market. So what is the plan there to up the capacity? Because I know we kind of take our own time to increase ramp-up of capacities, look at demand how they settle, but this clearly seems to be a standout product in terms of what's doing in the market and what are you hearing from TVS and even the competition dealers. So what is the plan there on capacity? Where are we today on 110 capacity and where you expect it to be ramped up in the near-to-medium term?

Capacity is not a problem. I think what is most important is customers are delighted, that we are not able to fulfil the total demand in the market, but we are very happy that customers like it, customers wanting it. And Jupiter is a great brand. You have 110, you have 125, it's a great brand and we are very happy. We are able to delight the customer and build this brand, we are extremely happy.

Fair enough. Sir, the final question is on the subsidiary performance to Desikan and to you as well. If you can just share on the TVS Credit, is there anything which you received from RBI in terms of inquiry on the IRRs what you're charging because there have been such moves with other NBFCs and there's a concern on whether interest rates will get capped. Anything if you can share there? And also in terms of the breakup of the book as to how much of the book is currently towards the auto loan, TVS products, and what is the broader classification or breakup of the loan books are? And any numbers on ROE, ROA, if you can share there? And finally, update on the European subsidiaries. How is the cost control there going, what's the kind of a reduction in losses what we're seeing there and any investments which are expected which are not already kind of budgeted for? If you can share that color, sir. Thank you.

So once let Desikan give you a color on TVS Credits. It has done extremely well. And the way the portfolio has been growing and how each segment has been growing, amazing journey.

Yes. As far as TVS Credit is concerned, as explained earlier, there is a 13% year-on-year growth, and we are at INR26,600 crores is the book size now. The net worth of the company as of 30th September is INR4,487 crores. And the capital adequacy ratio is around 19.1%, much higher than the statutory required percentage. And the cost of funds is also at a very, very competitive level at 8.03%. The PBT for the quarter is INR215 crores as against the comparable INR180 crores. As far as two-wheeler related concentration is around 27% of the overall 27% to 28%...

But here also it is steadily coming down, which means the used car, tractors, CD, consumer durable, MSME, many other areas where we are investing, that is growing much faster.

Yes. We have a very diversified portfolio now. And second is even the credit price interventions are there. So, we are extremely careful. Otherwise, we would have grown much ahead also, INR26,000 crores, we would have crossed INR27,000 crores also. The credit interventions and credit appraisals we have tightened. So, the disbursals also less to that extent. This is about doing very well, and this is about TVS Credit service.

Yes. You had a question on Norton. Please understand. Again, last time I told you that we are investing behind a portfolio of product complete design development, and that is happening. That's why I said, it will take another 6 quarters for the product to be available in the market, okay? And these are going to be brilliant products, and you will see products from ' 2026, okay, which in our financial year, 2025-26. For Norton, it is 2026. And what is most important is this is a great brand, and it's a super-premium. And this is going to definitely, definitely help us a new segment, new developed countries as our market. And definitely, we'll be also looking at India. I did give you the kind of briefing last time. And we will continue to invest for the product development at this point of time.

Fair enough, sir. Finally, EV revenues, have you shared it in the opening remarks if I missed it?

Which one?

EV revenues, revenues from EV during the quarter?

I said EV overall number is about 75,000.

The revenue number, sir if is it handy?

We need to check and come back.

The next question is from the line of Jinesh Gandhi from Ambit Capital.

A couple of questions from my side. One is you refer to you are seeing some challenges in the domestic market. Can you elaborate on that? What are the challenges that are visible on the ground currently in two-wheeler business?

Challenges, I can't say challenges. I think there are great opportunities in the two-wheeler market. Like I told you la st time this is the first time we are seeing a good response from the rural market, Maybe quarter 2, we saw a little bit slow overall industry. But during Navratri, we have seen pick up, I am expecting a good Dhanteras period, okay? And the rain is going to be good this year, monsoon is going to be good this year. So, the reservoirs are going to be having. So, I'm of the view that after a long time, we are going to see rural growing. Urban is also growing, okay? And a good growth rate we can always expect, about 6%, 7% -- 7% to 8% kind of a growth rate you can expect in the industry. And you know, TVS has got very, very strong brands, and we will outperform the industry.

Okay. 7%, 8% is for FY '25 or for the festive season?

No, no, I don't want to give festive season. We are working for quarter-wise.

That is the way we have to look at it. I think industry will definitely do well, 7% to 8% is a good growth rate.

Yes, it's very good growth rate. It's for the third quarter? K. N. Radhakrishnan Yes.

Got it. Secondly, we have seen drop in our realization on a sequential basis. Is there any one-off to call out for that drop?

I told you we introduced the single pack on EV, The iQube 09, what was launched in the market with a lesser price. It is only single pack. So correspondingly, we also kept a lower price, Because there was a lot of competitive intensity in the market. Because of that, there is a slight reduction in the realization. But I'm not so much worried about the realization. Because we will do well. Overall, we have to look at are we growing ahead of the industry, and we are doing ahead of the industry, and we have a very good product range. And please look at our contribution also. We have been growing steadily.

Yes. Undoubtedly. And staff cost increase on Q-o-Q, you mentioned about software charges as investment for the future technology. But is there any ESOP related provisioning in this quarter or that will come in future quarters?

There is a provision of about INR11 crores to INR12 crores towards that ESOP.

Okay. Got it. And lastly, with respect to the e-bike business in Europe. So, some of your peers have indicated severe stress in the e-bike businesses and they have undertaken impairment. How is our e-bike business doing? And do we need to take any impairment there?

I'm not able to hear, a little bit louder your voice. Can you repeat the question?

The electric cycle business in Europe, some of your peers have indicated severe stress in the European business for e-cycles and they've taken impairment for e-cycle business in 2Q. So, are we seeing similar stress on the ground? How is our e-cycle business doing? Do we need to take any impairment there?

You are asking about e-cycle business?

Yes, yes.

E-cycle business. First, I want to say that all of us know that Europe is going through some stressful conditions in the economy, So, when the economy goes through some difficult conditions, we have to be a little bit patient. And I'm very confident that this is a big opportunity in e-bike, and we are looking at how do we cut down the cost, how do we make sure that the customer gets the best product.

There is no need for any impairment-related provisions. We are very confident about that business and the future. And also in this period, we have used the opportunity to reduce our inventories. We have generated cash out of the working capital during this period. And therefore, we don't foresee or need for any impairment-related provisions.

Fair point, fair point. And lastly, working capital in the first half was about INR838 crores. For the full year, we still maintain INR1,000 crores to INR1,100 crores of capex?

For capex, we gave you the last time, the numbers are...

INR1,000 crores to INR1,100 crores is what you had indicated, but first half is already...

INR1,200 crores to INR1,400 crores, that is the range we gave last time. That still holds on.

The next question is from the line of Sakshat

Congratulations on the success of Jupiter. Sir, I have two questions. First on exports, sir. Like, what we are seeing is probably Jupiter volumes in the last quarter, sir exports have dropped significantly. Is it because we are seeing very good demand on the domestic market, and we are facing capacity constraints. That's why we have reduced the demand -- reduced the supply on the exports market? Or is it some country- specific challenge where we are facing some constraints?

See, there are no issues on the retail to the customer. These are things we keep looking at. We are one company who looks at on ly the end customer retail. To me, billing is only a checking point. So if the customer retail happens, automatically will happen. And depending upon sometimes season, you have to give a little bit more. There are some auspicious days. So I think the operational team along with the sales team, they take the decision.

And sir, like this LATAM market where we are targeting higher exports, which can be a higher growth segment for us. Sir, there basically, what are products will we be exporting? Will it be ASP accretive in terms of our overall exports mix?

Overall exports mix, all the products, all the products from India, and we are also leveraging some of the products from Indonesia.

And sir, one question on margins, like one of our competitors has called commodity inflation of 50 basis points on a quarterly basis in a con-call. Did we see any commodity headwind and like our gross margins have still only declined by 10 basis points, even though iQube share has mixed and there has been commodity headwinds. So have we taken any price hikes? Or is it more of value engineering and mix?

No, no. I think point 1, point two are, in my opinion, nothing to be worried about here. It could happen both ways. There are no significant challenges we have seen. And quarter-to-quarter, we have only done well. And last year to this year, you look at our material costs, we have significantly improved on turnover, almost 2.6%. Last year was 74%. This year is 71.4%. And if you look at Q1 to Q2, again, there are no major surprises. Point 1 here and there will be there. But that is not a big issue.

And sir, just one last question on TVS X. When can we expect volumes from TVS X?

TVS X, we have started. But as you know, it is a very super premium product. You will see over the next quarters, you will see much higher volumes you will see PAN India.

The next question is from the line of Amyn Pirani from JPMorgan.

Sir, my first question is on the recent refreshes that you have done on the Jupiter and the Radeon and the Raider. And like you mentioned, you are giving more value to the customer. With extra features, it looks like that in some variants, the prices are similar or maybe even slightly lower. So my question was that are you seeing some restraint from the customer in terms of the price points. And related question is that are you s eeing any price competition in the market from other players in terms of headline discounts during this festive period?

Are you happy on the gross margin improvement of the company?

Sir, I'm very happy, but I'm just asking as to whether the...

We have to look at it that way only because what we have to look at is on a portfolio basis, we should not look at it like that, you should look at totality. All businesses together, are you growing your contribution quarter-after-quarter. It's a combination of country, product, brand, pricing. We want to give good value to the cu stomers, good features to the customer at an appropriate price. We don't discount. Definitely, we don't discount. And we want to grow, like I said, first is customer, customer, customer. Second is growth ahead of the industry. Equally, now we have started quarter-after-quarter looking at and improving the contribution and profitability without compromising on investment for future, whether it is people, whether it is product, whether it is technology, we don't compromise at all. Because future is very, very important. While you are looking at this quarter, I think we work for the future.

And sir, speaking of margins, I just wanted to get a sense as to like, is there a time line by when you think that you want to start recognizing the PLI. I mean, is there a certain milestone that you're looking for? And the reason -- any reason why you're not taking started to take it yet?

See, we are working on a very clear revenue recognition policy for PLI. Based on that policy, the revenue will be recognized going forward in the most prudent and in the most compliant manner. You will expect a clear recognition of this going forward.

And sir, lastly, on the EV side, just in terms of directionally, could you give some color on how are the gross margins or EBITDA margins or any period by which you expect EBITDA breakeven? Or how are the trends moving in terms of profitability? If you can give some color?

We are positive on contribution. We are extr emely happy the customers are supporting us. We have a range of products in iQube. We are also coming up with new models for looking at various customer segments. Again, customers grow the top line. We are pretty confident that the bottom line will come. Whatever investments we are ma king, like I said last time, whether it's in software, whether it's in technology, whether it's EV technology. All these are going to help not only EV portfolio, the entire portfolio of the company. So this is an investment for the future, and EV will grow. And I won't be able to put a number. But my hypothesis or our hypothesis is very simple. You invest today so that you can get the benefits. It's exactly what we have done in TVS Credit, exactly what we have done in Indonesia. Today, it is doing extremely well. Same way EV will do extremely well. We don't look at when it is going to happen, but we are happy it is moving in the right direction.

That’s good to know sir. Thanks a lot and all the best.

The next question is from the line of Gunjan Prithyali from Bank of America. Please go ahead.

Hi, thanks team for taking my question. Just quickly, before I get to questions, I just wanted to recheck the numbers. The 4% growth that you mentioned earlier is for the entire year since the beginning of the festive period, right? Is that understanding correct?

Yes, festive period last year to this year, but during the Navaratri 9 days, industry grew by almost 10% to 11%.

Okay. Got it. And 7% to 8% guide that you're giving is for the third quarter?

Yes, that is industry our expectation and we will do much, much better than the industry.

Okay. Got it. Okay. Just now moving to the ques tions. On the EV business, could you just talk or give us a little bit more insights into how should we think about capacity ramp up? Because clearly, there's a lot of effort you are putting to put iQube to more dealerships. If you can give us a little bit update on capacity and how much touch points or dealerships, we have covered in markets we have covered. And in continuation also, sir, if I remember, you've taken that call, you don't want to aggressively discount or participate in price discounting, but we have tactically started to do that in recent weeks. So I'm just trying to understand is there any change in the strategy around the EV business? Are we okay to now compete from a pricing perspective also? So just more on how we are thinking about the business.

See, TVS iQube is a great product and the customers are happy. We are very systematically building the capacity on manufacturing. We have enough capacity. And even whenever we want to increase the capacity, it's a question of about 3 months, okay 3 months, 90 days is not a big period. On dealer network, we have now all about 750. We are also now increasing that very systematically month after month on a number of dealerships in India. We have started small exports because you have to see it in many markets. It may take a little time, but we are happy we have started exporting that to ASEAN market, some of the Asia markets and I'm pretty confident that the initial feedback are positive, while the numbers are very small. And like I said, we understood customer segments are there. That is why we gave a single battery pack with 2.2 so that at a spec ial pricing point. We always believe in not playing the discount game but giving the value game to the customer. And that strategy will always remain for TVS.

Okay. Got it. And maybe just very quickly on this. You said the dealership of 750. This is are we doing entirely exclusive, or we are now...

No, from day 1 we are giving it to our ICE dealerships only.

Okay. Got it. And the other question around EVs was on the affordable EV launch that we've been talking about. Are we looking to do that in fiscal '25? Any timelines around that?

I never said affordable EV launch. I said there is a new product which is going to come to a customer segment, just to clarify that will come in this financial year.

Okay. Got it. And just second question on the export market. Now clearly, there's been good pickup you've started to see in export front. If you can just give us a little bit color on how our geographic mix is, how much comes from Africa LATAM just the geo mix, some color?

I think Africa is the biggest market for us. Next is, now we have started, of course, Middle East is there, Asia is there. Some markets in ASEAN is there, but Africa is the biggest market for us. And Africa, according to me the bottom we have seen, now it is all about how it is likely to grow only because it has gone through a lot of challenges in terms of currency depreciation, availability, inflation. So we are of the view that you will see improvements because these are all big taxi markets and people lives depend upon these taxes. So there is -- there will be an upward trend. Of course, the prices because of the currency depreciation and cu stomer prices have gone up for the industry. That is also one of the reasons the industry is a bit low, but the worst is over. And our brands, HLX series, 100, 125, 150 has got very good pull in the market. LATAM, we are seeing a good opportunity. Our portfolio is very small in LATAM, but we can build it very well. Huge market, good opportunity for TVS and we are leveraging products from India as well as from Indonesia.

Tell me.

Will Africa be more than 60%, 70% of the volumes that...

Africa is about, I think first half, it's about 55% to 57%.

Okay. Got it. And lastly, sir, any comments on CNG portfolio? Is that something that we are now thinking to introduce to the market. And if we were -- what kind of timelines we are looking at?

We have a very strong R&D. Last time also I told you. We are looking at the customer, how customers are looking at it. Already in 3-wheeler, we have CNG. It's accepted very well. So we are very closely looking at how the customers are looking at the CNG. We can always come back with the product into the market. That is the point I would like to highlight on CNG.

Okay sir. Got it. Thank you so much.

The next question is from the line of Mumuks h Mandlesha from Anan d Rathi Institutional Equities. Please go ahead.

Thank you sir for the opportunity and happy festive season. Sir, you mentioned about the rural doing well, sir. Can you indicate how has been the rural market growth? And how is the urban market growth this last few months, sir?

See, H1, just a minute. H1, if you look at the overall I'm saying, looking at the rural, urban, I think overall growth in H1 was, just a minute. Rural H1 growth Vahan was about 8% and rural was slightly higher 9%, urban was about 7%. So this definitely tells us after a long time 1% here and there cannot be so big, but first time we are seeing rural also catching up. That's why it is very critical that monsoon, reservoir, agriculture, and we have to see rural slowly picking up. It will be a good news for 2-wheeler industry. And, of course, Q2 we saw a little bit slowing down which was expected. But Navaratri again, we are seeing 10%. We have to look at next week, which is very, very important how it is going to pan out. I'm of the view that reasonably good growth we can expect in Q3, And I'm hoping that rural will try to be in line with urban this year.

Sir, coming to exports three-wheeler sir, that has not yet seen a recovery like two-wheeler, we have seen a recovery. Any reason for the slowness in the export three-wheeler market?

I think our -- we are extremely good in Africa. Africa is going through some tough times. And as you know, we are not losing on the retails, but we have controlled our dispatches because the last thing we will do is the same principle of 1 month stock, When we look at international, we look at 1 month plus the transit time, And in domestic, we always look at one month stock. Maybe recent times, 3, 4 days extra here and there depending upon, because last thing we want is to lose retail, like Dhanteras or Navaratri. So that we calibrate, and we look at it that way.

It will happen. Going forward, it will happen. Q3, Q4 you will see that changes.

Just lastly on this PLI Incentive, just want to understand like when will we be starting to book this incentives?

Already Desikan answered you -- answered earlier, someone asked the same question, okay? We are developing the policy, and we will come back to you soon.

Sure, sir. Thank you for this opportunity, sir.

There was a question from someone about the EV turnover, for the first half it is about INR1,600 crores. Hello?

Yes, sir.

INR1,600 crores, it was an earlier question, at that time I gave the number, the INR1,600 crores for the first half.

Okay, sir.

Okay.

We'll move on to the next question. It's from the line of Viraj from SiMPL. Please go ahead.

Yes. If you look at TVS Credit Services, if you look at the segmental financials, we have seen a -- reported a PBT de-growth, while in a commentary we talked about a PBT growth of I think close to 15% 18%. So just trying to understand where is the disconnect?

Where is the PBT de-growth there? Last year we did INR180 crores, and we are at INR216 crores. We have grown.

So if you look at our consolidated segmental numbers, we reported around INR209 crores of segmental EBIT as against INR218 crores.

For TVS Credit Services of standalone also we reported, and it is INR216 crores as against last year's INR180 crores.

Okay, I will take this offline if that's okay with you.

Yes, sure. No problem.

And in terms of the EV product portfolio and the PLI, so PLI, the cumulative amount, if you can just give some color, what kind of cumulative amount we'll be looking at once we have a policy in place? And the second question is on the EVs, we were looking at a very aggressive launch pipeline. So I think couple of quarters back we were looking in next 4 to 6 quarters at that point in time to have a very aggressive launch pipeline. But somehow, we're not seeing much launches from our side. So just trying to understand what is the thought process behind the launches?

We time the launches also, We want to make sure that we overall grow ahead of the industry, This is a very measured call. On one side, we keep developing the product and we decide when to launch the product.

Okay. And last question is on the investment and capex, if you can just give for the full-year and FY '26?

Capex, the same INR1,200 crores to INR1,400 crores for the year. Investment, just a minute, I think investments again around INR1,500 crores is what we said last time.

Okay. Thank you very much.

Can we have the last question, please?

Yes, sir. It's from the line of Neel from Valuequest. Please go ahead.

Yes, my questions have been answered. Thank you.

Okay. Thank you, everyone, and it has been a great quarter two, and I'm pretty confident about the season, which is going to be in the next 10 days. And we are also confident about Q3, overall with best customer satisfaction and quality and the new products whatever we have launched, Jupiter 110 and many more products to come in this financial year, I'm pretty confident that with the brands like Apache, Jupiter, Jupiter 125, iQube, Raider, Ntorq, HLX versions, TVS King, and TVS Ronin and Radeon, we are pretty confident that the range is helping us and the customers are helping us to grow faster than the industry. Industry will be good in Q3, okay? Rural, first time we are seeing during the first half coming better growth than what we have seen in the past. And what is delighting us is while we are investing for future and employees and in investments in products and technology, we are able to consistently improve our EBITDA. Over the last 5 years we have seen significant improvement and quarter-on-quarter in the last six quarters we have now come to 11.7%, and we are confident that we will continue to leverage its growth, better product mix, sustained cost reduction initiatives to improve profitability going forward. Happy Diwali to all of you, all your family members, and let us bring a lot of prosperity to society in India. May God bless Thank you.

On behalf of B&K Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.