Ladies and gentlemen, good day, and welcome to the TVS Motor Company Limited Q3 FY24 Post-results Conference Call, hosted by Batlivala & Karani Securities India Pvt. Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Annamalai Jayaraj from Batlivala & Karani Securities India Pvt. Ltd. Thank you, and over to you, sir.
Thank you, Nilam. Welcome all the participants for TVS Motor Company Q3 FY24 post results conference call. From TVS Motor Company management, we have with us today Mr. K.N. Radhakrishnan, Director and Chief Executive Officer, and Mr. K. Gopalakrishnan, Chief Financial Officer. Now, we'll hand over the call to Mr. K.N. Radhakrishnan for the opening remarks, to be followed by question and answer session. Over to you, sir.
Good evening, good evening, everyone, and thanks for joining us today. Happy New Year to everyone. May 2024 bring in lot of happiness, success, and prosperity to all of you. We are very delighted to share the company's PBT and the performance during last quarter. Company's PBT surpassed the milestone of INR 2,100 crore for the first time. All of you will remember that last year, year as a whole, we had INR 2,003 crore as a year as a whole profit. PBT for the first nine-month period is INR 2,109 crore, and we are extremely happy about it. During Q3, the company continued its sustained growth in revenue, EBITDA and profit.
Company continuously surpassing its own milestones due to excellent product pipeline, and thanks to the customers and their confidence on TVS Motor. Let me get into little more detail about this quarter. During this quarter, company's operating revenue grew by 26%, INR 8,245 crore as against last year, INR 6,545 crore during Q3 last year. Domestic ICE two-wheeler market, company sales grew 33%, almost 800,000 units as against last year's 600,000. All of you know the industry growth. We have done much better than the industry growth. In international market, the company sales grew by 4% at 216,000 against last year's 207,000. Here also, we have grown better than the industry.
During the quarter, company sold 48,000 units of electric vehicles as against last year's 29,000. Here also, we have done better than the industry. Total two-wheeler sales grew by 27% at 10.63 lakh units against last year's 8.36 lakh units in Q3 last year. Total sales for three-wheelers is at 38,000 as against last year's 43,000 in Q3 last year. During this quarter, company's EBITDA grew by 40%, INR 924 crore as against EBITDA of INR 659 crore during Q3 of last year. EBITDA margin for this quarter is 11.2%, improved from 10.1% last year in Q3. PBT for the quarter grew by 63% at INR 775 crore as against INR 475 crore during Q3 of last year.
Profit for the current quarter includes other income of INR 73 crores relating to gains realized from investment. Profit after tax for the quarter grew by 68%, INR 593 crores as against INR 353 crores of Q3 last year. Now, cumulative nine months, company's operating revenue grew by 19%, and we are at INR 23,608 crores as against last year's INR 19,773 crores. As I told earlier, PBT for the first nine-month period grew by 45% at INR 2,109 crores as against last year's INR 1,457 crores. During the first nine-month period of this year, we have already crossed last year's overall profit of INR 2,003 crores.
Profit after tax for the nine-month period grew by 48%, INR 1,598 crores as against last year's INR 1,081 crores. On EV, Q3, we witnessed industry coming back, and all of us know that there were some tactical actions during this quarter. TVS iQube is growing ahead of the industry continuously over the last 6 quarters. We are continuously expanding the availability of TVS iQube in India. As we speak, TVS iQube is available more than 400 touchpoints. Progressively, we will increase this quarter to much more number of touchpoints in India. We have also started exporting TVS iQube. As we have communicated earlier, we will have a series of products this year, this financial year, for different customer segments, and we will have a complete portfolio of offerings in, in EV.
We will be launching these products in coming quarters. With a well-planned product lineup planned from TVS and the continuous improvement in infrastructure, we are confident that we will continue to be a strong player in EV segment. On TVS Credit, first time, we have crossed the book size of INR 25,000 crore. To be precise, we are at INR 25,300 crore, TVS Credit Service pre-pbt for the quarter grew by 75%, and we are at INR 230 crore against INR 131 crore during Q3 of last year. On outlook, the GDP definitely is growing better than all of us expected. However, there are some challenges in towing, but we could see some momentum coming back in the rural sector during Diwali season, and we expect in Q4, this momentum should continue.
International market, slowly and steadily, we are seeing change in positive growth, but it is taking little longer than what is expected in many markets. Our share of company's premium product sales are growing, and we will continue to invest in that, and we will grow. All of you know that during Q3, we announced our entry into Europe market by signing strategic partnership with Emil Frey. It is a 100-year-old enterprise, and we are very confident that this will be a great achievement for TVS Motor in coming years. Company will launch both ICE and EV products in select markets in EU. We are prioritizing the countries with strong two-wheeler demand, coupled with existing Emil Frey infrastructure and resources to build this distribution network.
With strong portfolio of brands starting from Apache, Jupiter, Jupiter 125, Raider, Ntorq, our star range, XLs, Radeon, TVS King, TVS Ronin, we expect, thanks to the customer confidence on us, we will continue to grow ahead of the industry, both in domestic and international markets. Overall, all of you have seen Q3 has been a great quarter for us, and we will continue the same momentum in terms of both revenue growth and EBITDA growth going forward. We will continue to invest in product technology going forward, and definitely, you will see many more products from the company. We have already seen the EBITDA growing in the last three years, and this quarter is the highest, 7.2.
We are confident that we will continue to leverage our revenue growth, premiumization, sustained cost reduction initiatives to improve profitability in Q4, in Q4, that is this quarter, the coming forward quarter and going forward. Thanks for your time and your continued trust on the company. Thank you. Once again, I would like to wish all of you, and before close, PBT for the first nine months, we have already crossed INR 2,100 crore, first time during the first nine-month period in the history of this company. Thank you.
Should we open up for questions?
Yeah, yeah, please.
Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone wishing to ask a question may please press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Chandramouli Muthiah from Goldman Sachs. Please go ahead.
Hi, good evening, and thanks for taking my questions. Just trying to understand the product mix. That's my first question. So, if I compare versus last year fiscal, we just look at scooters, IC scooters and mopeds. I think we are about 60% of the volumes were from that category, and iQube was about 4%, versus YTD this year, first 9 months, it appears that iQube has improved to 6% of the mix, but the IC scooters and mopeds portfolio has come down by about 500 basis points. So just trying to understand, were there any sort of product discontinuations, in the IC scooter and moped portfolio, Scooty Pep in the domestic market, Wego in the export markets, just trying to understand that a little better.
Scooty Pep is one product we have discontinued, because when we looked at the overall portfolio of the company, we looked at and we have enough good quality products in terms of Ntorq, Jupiter 110, Jupiter 125, and there is a huge opportunity to grow these products into the market. So it was a very measured call. Overall, I think we have to look at overall growth. I think we have done very well in scooters. We have done very well in EV as well. Okay. In terms of, like I said, what is most important is overall, we have to grow ahead of the market, and that has happened. Mopeds, there is a slight uptick.
That's why I said there is some change we are able to see in the rural market, but it's early signs. I think we have to wait, because still, the buying power of these entry-level customers, especially in the rural, it's only improving. It has not come to the normal level. So we have to be little bit patient here. Scooters and EV, we are very confident that going forward, it will do extremely well.
... Got it. That's helpful. Second question is specific to the Raider. I think product continues to do very well, seems to be a lot of pull demand in the market. It appears that you have been able to take some price hikes on the Raider. So just trying to understand, I think that sports 125 category seems to have more product launches from peers. There seems to be some price cuts also from some of your peers. So what's giving you the confidence to take these price actions on the Raider? And also just related to that, have you been able to take price hikes in January across the portfolio?
No, Raider is a great product. I think the customer confidence is what is seen. Like I said last time, Raider is one offering from the company, which is very well accepted in the market, and quarter after quarter, we are able to see the customer retails going up, and the market after market, we are seeing good success. I think it is purely the connectivity with the customers. And we constantly look at opportunity, and depending upon the opportunity, we looked at the pricing. And as of now, we have not increased any prices and in January or even in December.
Got it. That's helpful. And lastly, just a housekeeping question: If you could just share the export revenues and the spares revenues for the quarter, please.
Give me a minute. Parts revenue is around INR 792 crore for this quarter. Exports is about INR 1,882 crore.
Got it. Thank you very much, and all the best.
Yeah.
Thank you. The next question is on the line of Pramod Kumar from UBS. Please go ahead.
Yeah. Thank you all for the opportunity, sir. Just a follow-up on what you talked about spares. We have seen that your spare parts contribution to the revenues remains some 10%, which has been the trend for the last 5 years. While some of your peers have seen their spare parts penetration improve from 9.5% of revenue to almost 14%-15% of the revenue. Just trying to understand, is there, is there opportunity there, or what explains such sharp spare parts sales? I'm just trying to understand, is there availability challenges for your spare parts in the aftermarket, which you can address with faster growth in the spare parts?
Because the question, the reason I'm asking this is, on the last 5, 10-year horizon, your volume growth has been the fastest in the industry. It's been the highest in the industry by a long, by a wide margin. And, so to that extent, I think your spare parts velocity ideally should be better than the competitors. So, I'm just trying to understand what is, missing here, and are there any, thoughts or plans to improve the spare parts penetration? Because not only help the customer with better, access to quality, parts, and also it is, much more profitable than the product revenue, so product margins, right? So, if you can just help us understand this, sir.
Well, see, spare parts are also growing. If you look at our revenue growth, overall revenue growth and spare parts growth, we are extremely well. But we constantly look at where are the opportunities in terms of more penetration in spare parts. But fundamental thing is we want to push spare parts on the same principle of the stocks and the authorized parts stocks as well as the retailers. We reach the right kind of levels of stock, because we don't want to push the numbers just extra. I think what is most important is based on consumption, based on the service productivity in the dealership, that is the way we look at it. But every time when I look at it, there is opportunity. Definitely, there is opportunity to it.
Thank you, a lot, for that, sir. On the demand side, sir, you said rural has started to, has seen some traction, but how do you, how do you look at rural versus urban? Because you are one of the few guys who has a portfolio which is relevant in both urban and rural markets. How do you see the rural versus urban bit, because there is a bit of a thought process that under 110cc demand is coming back, rural demand is recovering, and it could kind of have a, what do you say, a drag on the scootization, the premiumization trend. From your vantage point, how are you seeing these trends playing out, sir?
See, rural too early, because if I look at it, there is only small improvement in terms of the entry level and moped. It's not a significant change, but I'm very sure that these are markets where they had maximum problems post-COVID, and the income level, and because of the transition to the electronic fuel injection, because of OBD, the BS-VI, and the further OBD phase A, I think the prices have gone up. So I think the transition is happening, and as you know, the retail financing is also supporting this set of customers. I'm very sure that quarter after quarter, you will see small improvement in this growth. However, significant growth will be seen in semi-urban and urban.
So this is something we have to be conscious. However, I think slowly you will see the change, and I'm very sure that the sentiments are becoming positive, so we have to wait and watch. One level of change we have seen this year in the Diwali season.
... Okay. Sir, on the P&L side, your other expenditure and employee cost continues to kind of surge, grow reasonably out of the revenue in a way, more or less on a quarter-on-quarter basis. So just trying to understand what would be the sustainable trend you are looking at, sir, especially for other expenditure, because last quarter we had couple of launches which were there only the Q2 days. Even on that base, we have seen a further improvement or a higher, higher spending there. And even on the employee side, if you can just help us understand, by when do you start seeing it as a percentage kind of normalizing on a sequential basis, sir?
See, other expenses, let me answer first. I think the, there is a, there is an increase in the packing and freight expenses because of, the expenses really going up, the, the prices going up. And as you know, this year, Q3, we had the season, full season in terms of both, Dussehra and Diwali. And, you remember, we definitely invest in, we keep it as an investment. We don't look at it as a cost on the marketing side. I think one of the reasons why Raider and Jupiter 125 and some of the portfolios are doing extremely well is the kind of investments what we have made. And that will help us to take it to the next level in terms of, you know...
And what is most important is, when the revenue starts growing up, these percentages also will help us. And, on employee cost, this is the area where we are investing in, especially in the new technology areas like, software engineers and also in, analytics and digital and also electronics. I think we are building up a very, very strong team. Okay? And, this is required, because when we are now trying to look at entering into many of the global markets, especially developed markets, this requires investments in people. Because this will come first, and then you will start realizing the turnover and the top line. So, I'm pretty confident that this is definitely going to be the strength of TVS Motor.
The salary cost, we are not investing in ICE, we are investing behind areas where we need to really look at the future and areas where we need to improve our domain expertise.
Fair. Sir, lastly, to B. Sriram, sir, if you can just help us understand the consolidated operation outside of financing arm, sir. There have been losses which had spiked up last year and during first half. How are we trending there in terms of the control on the losses there, sir, or on the expenditure side? Thanks a lot.
Yeah, let me start with finance, because they have done very well this quarter. For the quarter, the PBT reported yesterday was INR 229 crore, as against the sequential quarter of Q2, INR 179 crore, more by INR 50 crore. And again, like TVS Motor, the nine-month ended profit of INR 566 crore is more than the full year profit of INR 511 crore of last year. As far as book size is concerned, they have crossed INR 25,000 crore, and the GNPA is at 3.1%. And even after the circular on RBI with regard to the additional risk-related capital allocation, the capital adequacy ratio is at a healthy 8.6%. Therefore, the collections have been, as usual, very good.
The business disbursement for the quarter is around INR 7,000 crore, when compared to the last year, INR 6,000+ crore. And this is what, as far as TVS Credit is concerned. The other, as explained in the previous quarter also, the Norton related expenses are more out of accounting compulsions being written off, otherwise, they are all development related costs, and it has come down when compared to the previous quarter. Here, I want to highlight only, last time also I highlighted that please understand, you need to have a healthy product pipeline. And we are now designing and developing and putting that product in totality. And definitely it will take about 6-8 quarters to start completely realizing the benefits of that.
And, as you know, this is going to be a complete portfolio, which is going to help Norton to supplement the complete product range what TVS Motor has got today. So I'm pretty confident that, going forward, you will see a very strong product pipeline from Norton, and that, products will delight the customers globally, and it will start doing extremely well. Hello?
Yes, sir, I'm done with my questions. Thanks a lot. Thank you.
Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead.
Good evening, sir. I just want perspective from you on EV industry demand, and also, you know, competitive intensity. Are you seeing an increase in competitive intensity versus last time we met? And how is the profitability trending for, you know, iQube?
See, our profitability is continuing to be strong, okay? But all of us, we need to understand that there are some tactical actions. I think we can expect it from competition, but according to us, pricing is only one element in the process of buying. There are many aspects for the customer. He will look at the product, he will look at the experience, usage, connectivity, infotainment, range, build quality, many, many parameters he will look at it. So price is only one parameter, okay? And, what we should look at as an industry is, how we are going to focus on the customer, how we are going to deliver products which are going to be in a sustainable basis. And I, here, I wanted to only look at one thing, okay? We have seen similar short-term action in ICE also in the past, okay?
There were several tactical actions, short term, and many players have done it, and none of them have sustained. We have seen it in retail financing. We have seen such things when some models are discounting heavily. But please understand, consumer understands all this, and they are not going to, beyond the point, help building a brand. And we are talking about an industry which is going to be long-term, going to be very strong, sustainable, and we will very, very clearly focus on delighting the customer with every touch point. And already iQube existing customers are extremely delighted and happy. We are our brand ambassadors. Currently, we have over 400 dealers. We will double it by end of the quarter. So there is a huge opportunity, and we are also going to. We already started exporting.
There is a huge market for exports, and we are also coming up with a lot of product in the pipeline. New product launches are going to come. So these are things which we have seen even in the past, so we are not so worried. What is most important is we are continuously doing better than the industry. That is what is most important.
Sure, sir. I agree. In terms of the reach for iQube, in terms of number of cities, how is it right now, and how does it compare to-
I said 400, okay? We are looking at doubling it in the next three months.
I'm sorry, doubling it in the next three months?
Yeah.
Okay.
Because we use our own existing dealers.
Okay. Okay, understood. Just one clarification I had on the other income. There is a mention in the notes to accounts that there was some INR 82 crores income that has been recognized as part of other income due to a transaction with Sundaram Auto Components. And there is, you know, another INR 37 crores fair value recognition. But when I see the other income, it is showing up INR 73 crores. So can you please help me reconcile this?
The other income, one second, let me go to the notes for a minute. Let me just read the notes. The INR 80+ crores, what you indicated is a realized gain of, a capital reduction, what we have done through an NCLT order with the wholly-owned subsidiary, Sundaram Auto Components. And the balance is a notional loss that has been, due to fair valuation of investments due to the accounting standards. The net figure is what is that INR 73.4 crores. The other income for the quarter ended thirtieth September and the year ended thirty-first March, includes... That's a separate one, INR 37.55 and INR 61.69.
Note number 3 relates only to the INR 82.7, INR 27 crores, INR 82.27 crores of realized gain, and adjusted against the notional loss of around INR 9 crores.
I'm sorry, where is the notional loss mentioned?
It only talks about toward the reduction, that includes the profit of INR 82.7 crore, recognized as part of other income. The net figure of INR 73.4 crore is INR 82.27 crore, minus the INR 9 crore of notional loss.
Okay, and then where is this INR 37 crore recognized?
Oh, the point number 4 is the 30th September 2023, for the-
Okay.
For the quarter end,
Previous months.
Yeah.
I got it now. Okay. Thank you. That, that's all from my end.
Okay.
Thank you. The next question is on the line of Amyn Pirani from J.P. Morgan. Please go ahead.
Yes. Hi, sir. Thanks for the opportunity. So my question is on the export side. You mentioned that recovery is happening, but it's happening, you know, at a slightly slower pace. So, so two questions there: A, is the recovery happening due to demand being weak, or is it more to do with currency availability and other issues? And a follow-up on that is: Are we seeing further supply-related problems because of the recent crisis on the Red Sea, and is it causing us, you know, in terms of higher freight rates or unavailability of containers, and what's the outlook for that? Thank you.
I think on the first item, whatever you highlighted, definitely some of the markets we are seeing, both the depreciation of the currency and also sometimes delay. I won't say currency availability is not there, but there is a delay. Okay? In terms of when I said recovery, now. See, we went through last six months that a dispatch kind of a control, because the retails were slowing down. So all that is corrected. Now, we don't have any problem in terms of more and more retail, customer retail is happening. We are able to dispatch more and more. Coming back to the current crisis, whatever you said, it has just started. There are some initial feedbacks on container availability, some pricing going up. I think we have to very closely watch it, okay?
So, it's too early, I would say, but it is seen this month, for example.
Okay. Okay. Understood. Understood. That's, that's helpful. And, secondly, on the, you know, the rural recovery that you talked about, are we, you know, you talked about the EV, you know, related launches that you were expecting. Is there a plan to launch, you know, motorcycles or scooters, at the lower end, if you are seeing a rural recovery, or you think the portfolio on the ICE side is more or less, complete as far as, TVS is concerned?
... See, we have to constantly look at the strength of TVS is constantly looking at the customer segments and looking at where are the products we can come up with. So that will continue. I think we should not be so much worried about the rural challenges, what we have gone through in the last couple of years. See, given the population, given the kind of infrastructure investments on roads and kind of connectivity, whatever we have seen, and the mobility needs, I think two-wheelers, I always believe that it will grow more than 10% CAGR, definitely. And rural will also start growing. I think what we have seen is the ability of the rural not able to manage the cost increases and price increases, and their income not growing in line with that. Okay?
On the EV side, again, the product pipeline is based on the customer segment. There may be some short-term challenges in certain areas in rural. I think we have to, we have to look at a long-term point of view and then invest in these products and develop, okay? And we look at the customer segment, okay? And, more and more closer to the launch, I will tell you what kind of products and when we will be launching.
Sure. Sure. Thank you. Sir, just lastly, can you help us with the financing penetration that you have seen in the quarter?
This is retail finance?
Retail finance, yes.
Yeah. Just a minute. I'll tell you. Retail financing is now healthy this quarter, thanks to the Diwali season and the festive season. We have seen almost 65%.
Okay.
Which, according to me, is one of the, one of the best numbers I have seen in retail finance.
Yes, that's true. Thank you, sir. I'll come back and with you.
Thank you. The next question is from the line of Raghunandhan NL from Nuvama Institutional Equities. Please go ahead.
Congratulations, sir, for strong set of numbers. Sir, firstly, a follow-up question on the EV side. In earlier quarters, you had indicated that, we have achieved the gross margin breakeven for, electric two-wheelers. Has margins further improved considering the fall in battery prices and continuous efforts on localization and better scale? And, you know, going forward, you should also get, more benefits in terms of the PLI incentives. So, so how are you looking at it? Would you be retaining the benefits, or partially passing on the benefits to support EV penetration?
See, we, like I said, the, the margins are positive and it is, definitely improving. What is most important is this is an investment phase in terms of products and, technology, and we have to come up with a range of products and then grow good volumes in the market. So that is the focus we are in. But we are happy on the journey of margins and how it is overall panning out. And we have also now just started our products into the global market. There's a huge opportunity there. So if you ask me, the priority is to look at delivering the products which are in the pipeline, continue to grow the customer satisfaction and the volumes, concurrently look at how do we cut down the cost and continuously improve the margins.
Got it, sir. On the overall raw material cost, there is some decline on a quarter-over-quarter basis. So, just trying to understand, what are the factors which led to this decline? Because even on a quarter-over-quarter basis, if I look at the share of exports, that has slightly come down. So, despite the exports coming down, there is margin improvement. If you can talk a little bit about what helped the margins.
See, quarter on quarter, if I look at, last quarter to this quarter, material cost has reduced, mainly due to sustained material cost reduction. And as you know, the commodities are almost flat, and we have not done any major price increases, practically no price increases in the last quarter. Okay? So, and if you compare the same with last quarter, last to last year, similar quarter, definitely there is a softening of material. We have done some price increases because it's Q3 of last year. Okay? And please remember, all these are with, with the EV also. So overall, I think the contribution management, the material cost reduction, overall product mix and focus on opportunistic price increases, have helped the company to improve, the raw material cost as a percentage, and we are sustaining that and we are moving forward.
Got it, sir. And just lastly, Ronin as a product has received a positive response. So, so how would you target improving presence in cruisers in terms of products, network, or riding ecosystem? What are your thoughts? And would you bring in more models either in the, under the Ronin brand or Norton brand in future to improve your position here?
Ronin, the initial response has been pretty good, and we are happy. I think we have to, we have to sustain. We have a very clear plan to sustain this momentum and build it, as a, as a big brand. Norton, I already told you, we are coming up with a, with a very clear product plan. Closer to launch, I'll give you what kind of, products and, definitely we will focus India also in the, in the, in the journey, because that Norton complete portfolio is going to supplement the overall excellent product range what we have, what TVS Motor have.
Got it, sir. Thank you very much, and wishing you all the best.
Thank you. The next question is from the line of Jinesh Gandhi from Ambit Capital. Please go ahead.
Hi, sir. Just to quickly clarify, on the EV product launches you mentioned, will you be launching more products in fourth quarter itself or in FY 25, I'll be referring to?
These four quarters, including this quarter, you will see launches. Closer to the time of launch, I'll let you know. But we have a very, very good product pipeline in the EV side.
Okay. And in that context, where are we in terms of capacity for EVs, or how much it can be for iQube and overall electric two-wheelers?
Capacity is not a problem. I think, we have taken enough countermeasures and investments in terms of the right capacity. Our plans are ready. We have got a very good supply chain in India. We have developed them. So, at best, we require about 3-4 months to increase the capacity. So, we always plan ahead along with the product launches, so I'm pretty confident on that.
Got it. Lastly, can you update us on the PLI incentive for iQube and other models, which you will be launching? Where are we in that journey?
We are, we are in the advanced stages. The PLI approval process for TVS is in advanced stage, and we will let you know as soon as we get the certification is getting completed.
Okay. And lastly, can you talk about the INR realization for this quarter, dollar realization?
Yeah. One second. It's around, it's around INR 83.
83. Got it, sir. Thanks, and all the best.
Thank you. The next question is on the line of Hitesh Goel from CLSA. Please go ahead.
Thanks for taking my question, sir. Sir, can you shed some light on what is happening in export market? Because like you well pointed out, this Red Sea crisis is just starting. We are seeing inflation being very high in the end markets in Africa, Latin America. So, you know, can you give, give us some, you know, country-wise inputs on what is happening in these markets and what are you doing about it?
Actually, African markets, there are some challenges in terms of the currency depreciation. Like I said, currency availability is still good, but there are some delays. Inflation is settling down. I won't say it was as harsh as what we have seen in the past, okay? And in terms of certain Middle East and other markets, it's good. Actually, the market is growing and there is a good opportunity. LATAM is another market, another set of markets. There is a good growth opportunity, both for the industry and for TVS, okay? ASEAN is another market which has actually done well last year, and we have a very good opportunity there. So overall, I would say that and India, all of you know how the market situation is.
Overall, I think the worst portion of this is over, and we'll have to see how each and every market is going to pan out, and we have excellent product range. So I'm, I'm, I'm pretty confident that while there could be some delays, for example, this Red Sea, we'll have to see how it is going to pan out. Maybe there will be some little bit of delays in container availability for some time, and then it will settle down. So overall, I am, I'm, I'm very happy that our products are very well accepted in many of these markets, and we are able to grow ahead of the industry. And we are also seeing certain markets growing much faster, so we will leverage that depending upon the situation.
This quarter, we are also seeing Sri Lanka slowly opening up. So I'm feeling that international market, we have also seen this kind of challenges in the past, so we have to be very cautious about the market, and we have the right kind of inventories in this market. So I'm looking forward to this year, this quarter, as well as the next four quarters. I think we should do well in the overall EV market.
Sir, just a clarification, can you give us the volume mix of your country-wise or, you know, Africa, LATAM, South Asia in nine-month FY24 versus last year? So just to get a sense how these markets are growing.
Yeah. Africa, Africa has been the biggest market for us, and now LATAM is growing. I don't have the exact data with me, but Africa is the biggest market, and there is a great opportunity for us to do well there. LATAM, we have just started about a couple of years back, and the industry is huge in LATAM. Middle East also very good market, and we have just started in the last few years. You know, but you know, Sri Lanka used to be a great market, now it was closed, now slowly opening. I would say that the industry is very small as of now. From the other markets like Philippines, Myanmar, they're all opening up, so there are growth opportunities there.
Each country is in a different kind of situation, but the good thing about our product range here and also Indonesia is definitely helping us to grow in this market disproportionately. I would put it that way.
Okay. So my second question is on electric two-wheeler. Basically, you know, you're going to get this PLI incentive, right? Would it get passed on to the customer to improve adoption, or would the industry or you guys would, you know, keep some part in the margin? Just to get a sense, because-
We always look at the customer and the customer segment, okay? These are thanks to the government, whether FAME or PLI, these are all incentives to promote this industry. I think if we look at the total investments and the people and the total kind of product range, what we are developing, okay? These should be taken as real support from the government. I think we should not plan for any kind of other way, you know. For example, FAME, all of you know how it went down. I think we should be very confident about products and the customer segments, and engage with the customers, and expand the market. That should be our approach, okay? And pricing, again, again, I am repeating, pricing is only one factor.
There are many other factors when the customer looks at a product. And what is most important is, I always seem, you know, you have to build the brand, you have to build the resale price. Here also, exactly like ICE, from the customer point of view, he will look at the brand, whether it is getting built over a period of time, and we want to be playing the sustainable game. And we are pretty confident that thanks to the government, this PLI, we are all very, very good for designing and developing and building Ather in a big way.
Great, sir. Well said. Thank you. Thank you very much, and all the best.
Thank you. The next question is from the line of Gunjan Prithyani from Bank of America. Please go ahead.
Hi, hi, good time to take you my question. I just had a few clarifications. You know, I just wanted to know this INR 300 crore investment, where has that been deployed in this quarter? And if you can, you know, give us a number on the CapEx and full year subsidy investment also again, please.
One second, please. So we have invested in Norton around INR 80 crores, and the other subsidiaries around INR 100 crores, INR 120 crores. As far as... I mean, we have also invested in some technology company like Killwatt, and this is what I think overall. We've invested in Norton, SEMG and Killwatt.
A little bit in TVS Digital.
Yeah, and a little bit in TVS Digital.
Okay. And what is the guidance for full year now on the sub-investments? That is, we are already running at roughly around INR 900 crore so far, nine months end.
Million around-
INR 950 crore.
INR 200 crore.
Okay. Anything on CapEx, sir, full year CapEx?
CapEx, I think last time we highlighted around, including EV, predominantly on EV, INR 1,000 crore, including all the products in EV and the product pipeline, what we are looking at.
Okay. So overall, INR 2,000 crore, 1,000 on the vehicle side, and the subsidies would be about another INR 1,100 crore. Okay, that's clear. So the other question I had, maybe just a clarification or repetition. You mentioned right in the beginning that, you know, there have been some tactical moves in the EV market. You know, can you just talk about what sort of changes that you've seen in the competitive? Because, clear in terms of ramping up the business on 20,000 units a month, then we've seen that number come down. Is there any change that you've seen in the market environment that has slowed down our ramp-up?
See, like I said, tactical, all of you understand what is tactical, and you know, competition, how they are looking at it. We are very clear that we want to build brand iQube, and it is doing extremely well. It has grown ahead of the industry. What is most important is, you have to grow ahead of the industry, and ahead of the industry very respectfully in terms of overall, on one side, customer engagement and customer NPS growing, on the other side, the gross margin of the business growing. So this is exactly what we have done. And we are only present in 400 touchpoints today in EV. So we have got a huge room to improve that. And just now we have started the international business. So overall, we are pretty confident about iQube, okay?
How it will, it will move in terms of both numbers and market share, and how the other products which are going to be launched in the market is going to help to further grow the overall EV proportion for TVS.
Okay. So, sir, what I understand is basically we will not engage in the sort of pricing, sort of discounting scenario. What we want to do is get a more product place. We are fine to have little bit aberrations here and there. That, I mean, our strategy is going to be straightforward. We don't want to be priced, is that correct?
I did not say any of that. I said we are focused on the customer, we are focused on engaging with the customer. Pricing is only one strategy. Customer looks at as a whole, he looks at every aspect of the product. He looks at the total cost of ownership. He looks at every element of the experience he gets. That is the way sustained brands are built, and that will be the focus of TVS. That will be in the play. We will always. And we have done it in ICE, and we have seen that. That is the reason we have grown ahead of the industry with less than 30 days of stocks with every dealer, completely cash and carry even in the domestic market, and consistently improving our quarter-on-quarter EBITDA.
Okay, got it. Just last clarification, sir. You on the EV business, is there given that, you know, you mentioned earlier, a lot of investments being made on software, engineering, digital, and a lot of this is around the, even the employee costs around EV. Can you quantify the drag that we're seeing because of the EV business on the TVS, like in terms of either absolute number or?
I don't look it as a drag. I look at it as an investment. If, if India has to be Atmanirbhar, then TVS has to become a global brand, we have to invest in the product, we have to invest in technology. I never look at it as a drag. I look at it as an investment.
I'm just-
I look at it as. Today, if you invest, you will get the benefit. Last time also, I highlighted PT TVS ; we are seeing the good results today because we invested very, very clearly towards that. Today, PBT TVS is giving profit because we invested in the product. Today, you are seeing TVS growing ahead of the industry, customers are delighted, and we are seeing sustained growth in our EBITDA only because of investment in people, investment in products, investment in technology, investment in marketing. So that's all we will do.
No, no, I was just trying to get at ICE profitability, but it's fine. Thank you. Thank you so much, sir.
Thank you. The next question is from the line of Vipul Agrawal from HDFC. Please go ahead.
Yeah, hi, sir. My question pertains to Apache portfolio and more towards 150 cc to 200 cc industry. How it has changed in last 2-3 years, especially after the launch of Raider and other premium motorcycles in 125 cc? And, how do you see the growth outlook for this segment over the next 1-3 years?
I think both, as far as we are concerned, Apache is doing extremely well, and Raider is also doing extremely well. Okay? And this segment, according to me, will grow, you know, because there is very good infrastructure development, and the demography is also pretty good. India is young, and many people want this kind of premium product in a big way because they are very aspirational. You know, this is the segment which, according to me, is going to grow. And 125 segment is a very good segment where, you know, people will look at many, many technology, what is available in the high-end is also available here, and Raider has done extremely well.
If you look at Raider everywhere, I think it has got state-of-the-art, many new technologies, and, you know, it gives the best brand for this set of customers. So my view, these segments will do extremely well, both the 150 and below and 125 and below.
Thank you, sir. Just a follow-up on this. So for, like, if you see, like, 4 years back, when somebody has to buy a premium bike or a sports bike, they had to go beyond 150 cc and above only. Now, they have a good bike option, like Raider, available at a cost of, around INR 100,000 ex-showroom. So, so what kind of, things you are, changes you are seeing in the customer perspective? Like, do they still want to go for 150 or 200 cc? Do they want to spend, INR 50,000 more on the same bike? I'm just trying to get a perspective from, like, next 2 to 3 years. Do they still, like, I understand metro and Tier 1 cities, customers will go, but what about Tier 2, Tier 3 cities customers?
I think, I think what is most important is, again, I want to repeat the same thing. Price is only one factor. I think people look at the features, technology. What you get in an Apache is completely different, and the set of aspirations of those customers are completely different. And if you look at the 125 Raider, it is completely different. And we are very clearly positioned, depending upon the customer segment, what technology, what kind of features, what kind of, you know, design it is going to attract them and how we are going to deliver it to them. Okay? That is the ability of any company to look at the customer segments and design and develop the product. So both are very, very important, looking at the customer segments and delivering it. Price is only one aspect. Please understand, when people look at wholesome, okay?
People look at what is the kind of, you know, the kind of, overall, customer value through technology, infotainment, the kind of connectivity they are looking at in a product. Okay? We have seen it, not only in two-wheeler. You look at any kind of products, what the consumers look at. Okay, consumers look at, and thanks to the retail finance, you know, when they come, they, they don't have to invest everything at that front. They are able to look at, okay, initially some money, and then they can always upgrade on a 36th month or a 24th month. So to me, the aspirational, Indian customers are very aspirational. Not only Indian customers, if you look at any developing economy, they are very, very aspirational. They look at the product pipeline and say, "Okay, this is really good.
I want to be going for this kind of a product." What is most important is you have to keep Apache brand differently, Raider brand differently. So we have seen. Actually, both can supplement each other, and we can draw more customers to look at us, and we can grow faster. That is exactly what is happening with Raider's presence there.
Understood, sir. Thank you. Lastly, one again, follow-up on Apache again. So, Apache has, I guess, one of the best-in-class, aerodynamics in terms of sports biking and speeding and everything. So, do you plan any kind of special marketing happening, like other OEMs are doing for their premium portfolio, to give a boost to Apache portfolio?
I respect all competition, okay? I look at the customer, and we are doing appropriately what the customer wants. And we are extremely happy for the response what we are getting in Apache, the response what we are getting in Raider.
Thank you, sir.
Can we take the last question, please?
Sure, sir. The next question is from the line of Pramod Amte from InCred Capital. Please go ahead, Pramod.
Yeah, thanks for the opportunity. Sir, considering the amount of investment Norton is doing, will you help us understand the market opportunity there and which segments you are trying to target over the next 2-3 years period? As you clearly said, it will take 2-3 years to realize the current benefits. That's one. Second is, wanted to know, considering your success in EV in India, how are you looking at the opportunity for e-three-wheelers in the next years perspective?
In terms of, Norton, like I told you, it takes 6-8 quarters for the product pipeline. We need good set of products when you come up with, when we, when we start operations of, Norton. And as you know, the premium and the super-premium , actually, Norton is super premium category, specialized category. This category is growing disproportionately in many markets, okay? And there is a huge opportunity for TVS, given the kind of, capability, design and development capability and quality orientation, what we have. So, Norton, you know, at this point of time, we have a very clear roadmap, which market, what kind of volumes, and how we want to penetrate. Closer to launch, I can give you more details, okay? But we are pretty confident.
Like I said, you know, Norton is going to add portfolio for TVS, and it is going to deliver very good results for the company. Now, coming back to e-three-wheeler, we are in the advanced stage. This is one area that is also going to do extremely well in the market, okay? Closer to launch, again, I can give you more information about e-three-wheeler, but it will do extremely well, because, you know, not only in India, we can look at the markets where we are exporting. This change is going to help us to have a better portfolio in terms of three-wheeler.
Okay, sir. Thank you very much.
Thank you.
Thank you. Thank you. Thank you, everyone. Once again, happy and prosperous 2024. You have seen a quarter with the best results on operating revenue of INR 8,245 crores, net EBITDA margin of 11.2%, and PBT for the year, INR 2,100 crores, crossing the last, in nine months, crossing last year's number of INR 2,003 crores. I am very confident that our focus on customers, we will continue with the kind of portfolio what we have, and we will definitely leverage the scale benefits and premiumization and material cost reduction. Quarter after quarter, we will continue to improve our EBITDA gains. Thank you. And once again, Happy New Year, prosperous New Year to all of you. Thank you.
Thank you, members of the management team. Ladies and gentlemen, on behalf of Batlivala & Karani Securities India Pvt. Ltd., that concludes this conference call. We thank you for joining us, and you may now disconnect your line. Thank you.