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TVS Motor Company Ltd
Earnings Call Analysis
Q2-2024 Analysis
TVS Motor Company Ltd
The company's revenue for this quarter stood at INR 8,145 crores, reflecting a healthy growth of 13% from the previous year's INR 7,219 crores. The overall strategy is to continue the momentum in top-line growth and EBITDA improvement, with a particular focus on premiumization and leveraging scale benefits. The EBITDA margin has reached 11%, and there's a commitment to pushing this ahead of the industry standard.
The quarterly report indicates a company that's robust in its sales, with 2.52 lakh units sold in this quarter, marking a 4% increase from the last year's same quarter. A notable accomplishment is the 58,000 units of electric vehicles sold during the quarter, a significant surge from the 15,000 units in the past year. This growth in sales extends to electric vehicles, where the company surpassed the 2 lakh units sales mark. A significant milestone was the launch of the TVS Apache RTR 310 on a global scale, which underscores the company's focus on innovation and global presence.
Profits have been robust, with a 32% increase in profit after tax at INR 537 crores. This growth is also reflected in the Profit Before Tax (PBT), which grew by 39% to INR 180 crores. Looking beyond domestic successes, the company eyes international markets with the expectation of expanding to Europe and other markets within the next 2 to 3 quarters. This international market expansion contributed to a record 60,000 units sold this quarter. The alliance with BMW Motorrad, which resulted in the production of the BMW CE02, is further testament to the company's commitment to global success.
The company continues to prioritize brand building investments, especially in the promising electric vehicle sector and the growing realm of digital and analytics. There is a clear investment in brand development, as evidenced by recent product launches, and in the innovation pipeline, which remains robust with plans to roll out new products in the range of 5 to 25 kilowatts within the next year. Concerning cost management, moderate price impacts, combined with material cost reductions and improved product mix, have been favorable, with no significant cost increases expected in the coming quarters.
With an eye on sustainable growth, the company has no immediate pricing alterations but retains a close watch on pricing opportunities. The company's investment in subsidiaries, such as the INR 227 crores in Singapore, demonstrates its long-term growth strategy, which includes a clear focus on 3-wheelers and improving performance in this category.
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Ladies and gentlemen, good day, and welcome to the TVS Motors Limited Q2 FY '24 earnings conference call, hosted by Batlivala and Karani Securities India Private Limited.[Operator instructions] I now hand the conference over to Mr. Annamalai Jayaraj from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir.
Thank you, Seema. Welcome all the participants to TVS Motor Company [indiscernible] conference call. From previous motor company management we have with us today, Mr. K. N. Radhakrishnan Director and Chief Security Officer. I'll now hand over the call to Mr. K. N. Radhakrishnan for the opening remarks to be followed with a question and answer session. Over to you, sir.
Good evening, everyone, and [indiscernible] season's greetings to all of you and your family members. I'm extremely happy that our company continues on growth trajectory, both in revenue and profit, and we are extremely happy that we have posted the highest level of revenue, EBITDA and profit.Revenue for this quarter is INR 8,145 crores, grew by 13%. EBITDA is INR 900 crores, grew by 22% and PBT INR 724 crores grew by 32%. During the first half of the year, company profit after tax crossed INR 10 billion that is INR 1000 crores growth, registering a growth of 38% as against INR 728 crores during the first half of last year. And we are extremely happy that 2 significant global product launches happened in the last quarter, one TVS [indiscernible], I'm really sure that these 2 launches will delight the customers going forward, both in India as well as many markets globally.Now, coming specifically to the Q2. During this quarter, company's operating revenue grew by 13%, 8,145 crores as it is INR 7,219 crores during Q2 of last year. In domestic [indiscernible] market, company's sales grew by [ 4% ], 7.35 lakhs as against INR 11.1 lakh during last year's same quarter Q2. And as you know, we have grown ahead of the industry.In the international market, company sold 2.39 lakh units, that's against INR 2.52 lakh units in this quarter. Again, we have done better than the industry. We are able to see improvements in terms of the customer retail in the international market, and that will help us also to improve our sales to the market in the international side.During this quarter, company sold [ 58,000 ] units of electric vehicle as against 15,000 units during Q2 of last year. Thanks to all our customers of [ Genius IQ ]. And the total 2-wheelers grew by 6%, 10.31 lakhs second 9.77 lakhs during the Q2 of last year. 3-wheelers, we did 43,000 units as against 50,000 units last year in Q2.So overall, sales have been much better this quarter. And on profit, during this quarter, company's EBITDA grew by 32%, which is at INR 900 crores as against EBITDA of INR 737 crores. We registered an operating EBITDA of 11% asset, it was 10.2% during last year quarter 2. This significant milestone was possible with robust growth in revenue and sustained cost reduction initiatives taken by the company.The PBT for this quarter grew by 32%, INR 724 crores as against INR 549 crores during Q2 last year. Profit for the current quarter includes a onetime other income of INR 37.5 crores to a higher valuation of the investment.Profit after tax during this quarter is INR 537 crores as against last year's INR 407 crores, growth of 32%. Now coming to first half performance. First half of the company, the operating revenue has grown by 16%. We are at INR 15,363 crores against last year INR 38,228 crores. PBT the first half of the year grew by 36%, INR 1,334 crores as against INR 981 crores.PBT for the first half of the current year includes other income of INR 93 crores profit on sale of investment and fair valuation of investment. Profit after tax for the quarter grew by 38% and [indiscernible] INR 1,004 crores as against last year INR 728 crores during the first half of the last year.Now, coming to new products has been [indiscernible] the superstar addition inspired by the iconic Marvel superheroes, Black Panther and Iron Man, I think all of you know that TVS Raider is doing extremely well in the market. TVS Raider raised a distinct [indiscernible] of cycle with powerful [indiscernible] of Black Panther and Iron Man will add to its unique positioning and appeal in the market. TVS Jupiter 125 now enables it Smart Connect technology, which comes from TVS. It comes with advanced connected features if we set to create a new benchmark in this segment with first-in-class features for its connected customers.The scooter comes in 2 new [indiscernible] with the Smart Connect [indiscernible]. We also launched the TVS Apache RTR 310 globally, and it has got [ interactive ] blend of power, agility and style. It comes with many segmental features by cruise control, [indiscernible], including super [indiscernible], 5-inch TFT control is first-of its kind connectivity features [indiscernible] dynamic, stability control. And we are extremely happy that since inception of the strategic partnership with BMW Motorrad both companies have achieved remarkable milestones, setting a new industry standard and delivering exceptional [indiscernible] to the customers worldwide.This quarter, in this partnership, we have more than 1,50,000 satisfied divided global customers. Coming to EV, EV [indiscernible] continues to receive very positive customer feedback across all markets and continues to improve sales and market position consistently over the very last 5 quarters. We are extremely happy that we have surpassed 2 lakh units sales mark, and we will try to thank the 2 lakh customers of TVS iQube and this is continuously growing and market share as well.During the quarter, we enhanced our production to 25,000 per month. And then we will take it to the next level. We have a very good booking, healthy booking continues. We are expanding the availability of TVS iQubes in India at the end of September, we have 337 touch points, and we are now continuously expanding the same.We are also planning to launch a [indiscernible] product in the range of 5 to 25 kilowatts in the next 1 years. All of you have witnessed the TVS [indiscernible] during this quarter, and we will start delivering to the customers in Q3. TVS [indiscernible] definitely redefine the way we look at EVs globally. This is designed, developed and made in India, TVS [indiscernible] will lead the way to become a global benchmark for a machine that is more electric. It is [indiscernible] electric. This quarter, we announced the start of production of BMW CE02 jointly designed and developed by TVS and along with BMW Motorrad and that is also going to be a huge success globally. With the product lineup plans from TVS and continuous improvement in Infrastructure, we are confident that we will continue to be a strong player in the EV segment.Now, turning to TVS Credit. All of you have seen it's an outstanding performance. The book size has already dropped INR 23,500 crores. Its portfolio is well diversified, covering tractors, used vehicles, durable [indiscernible] 2-wheelers. PBT for the quarter grew by 39%, INR 180 crores against last year's 129 crores in the same quarter of Q2.When we look at Q3, '23, '24 ongoing festival season has started well for us. I think it's on a positive month for us during the [indiscernible] season, we have grown ahead of the market, ahead of the industry. The [indiscernible] is definitely a little bit affecting the sentiment, especially in the rural, but we are hoping that things should improve in this month and next month.International market, we are witnessing improvement in the retail, and we expect slowly and steadily, the momentum will continue and grow, and that will definitely our TVS in a big way. Customers of TVS Raider, TVS Jupiter 125 are extremely delighted and the volumes of this product will further enhance our market share and growth, both in domestic market and the international market.As all of you know, we have an excellent product portfolio starting from Apache, Jupiter 110, Jupiter 125, Raider, [indiscernible] in the international market, [indiscernible]. We expect TVS [indiscernible] definitely grow ahead of the industry, both in domestic and international market, and I'm very confident that TVS [indiscernible] recently launched Apache RTR do very well for the company.We have received overall, we have grown very well in the top line and continues focus on the premiumization, liberating the scale benefits, focused work on the sustained material cost reduction. Our EBITDA has reached 11%, and we want to continue to have this momentum of growing the top line ahead of the industry and continuously improve our EBITDA. Thank you.
Sir, shall we will begin with the question and session?
Yes, please.
[Operator instructions]Ladies and gentlemen, we will wait for a moment for questions to assemble. We had the first question from the line of Mr. Kapil Singh from Nomura.
Congratulations on performance. I'll just start with the performance for the share season. You mentioned that the share season, you have grown ahead of the industry. Can you just tell us what would be the industry growth in your estimate? And how much is TVS grown during the share season?
I think today, obviously, more than VAHAN numbers because there is a lag. So vis-a-vis what we have done, that is exactly what I said, and we want to continue the momentum. And we are definitely looking at the same to operate to continue for the season. Possibly, we will be a little better growth coming from the rural area. Apache is doing very well. So we want to really use this opportunity because Dhanteras we round the cart and another 10 days. And this year, we are expecting Vival also to do well, both for the industry and we want to do better than delinquency.
Sure, sir. And just on the cost side, if you could talk us through, we have seen a good improvement in normal sales. But at the same time, we have seen strong growth in other expenses as well. So if you could just call out what's going on there? And what is the cost outlook as we look forward or any pricing changes?
See, we have done extremely very well the combination of some moderate price impacted. Plus the overall, when we look at the material cost reduction and the product mix that has helped us to be deterred in terms of the margins we service last quarter, last year same quarter. So I think overall, it is moving in the right direction. And with respect to the cost, as you know, we had 2 product launches in the last quarter. So this is very, very important because we always invest behind building brands. And areas like salaries, we invest in really in EV and also we are really putting our a lot efforts in digital and analytics area, strengthening the company, software area. So these are all invest for future because this is something TVS has always done, and we will continue to do that. So this is something for future. And we want to even behind the brand. We want to invest in, design and development. We want to invest in people, especially in these areas of new technology, digital AI, okay? So these are the --
Sure, sir. And if you could just talk about the cost outlook as we move ahead and any pricing changes that we have done during the current quarter, which is October to December period?
Yes. October. So no pricing it so far, but we constantly look at pricing opportunities because this is something we'll constantly look at it. And I can tell you, thanks to the customers, we are able to appropriately review and take the prices. On costs, I think I'm also clear that this year, next 2 quarters, I don't think the costs are going to go up. Maybe you may get some opportunity or slightly potency of the litigation in terms of the material costs.
Sure, sir. And wish you all the best. I'll come back in the queue.
The next question is from the line of Mr. Pramod Kumar from UBS.
Congratulations on a good set of numbers, sir. And continuing the couple questions on the expenditure and your explanation of the launches. Sir, you wouldn't be having this kind of a large-scale launch on a regular basis, right? Because here, you had 2 launches, both done in the industrial market, which you've never done before. So I'm just trying to understand is there something which you can expect if you will normalize a bit or the other is service specially on launch related events and all that going forward?
Marketing, we treated as an investment, Promod, because it is not only product. You have to build EVs brand globally. Like when we presented TVS RTR resell that we want to be not only in the developing economies, we want to be in the developed economies also. So this is one investment, and we will definitely invest, okay? And we will continue to invest the way the products because the strength of series is one customer, customer satisfaction, customer delays in the existing products and really focusing on technology and investing in products, which are really, really superior in future technology and delivering that. That requires a lot of investment to communicate craft to the customer. So we will continue to invest. But we even will be proven. If you look at this quarter, we are not participating in the courts. We are participating in investment to build the brand. So that will continue.
Okay. Fair enough. I get the depth. The second question is on the impaction side, sir, and related to even EVs as to if you can just help us understand what is the path for you in terms of taking electric vehicles to the international market available in that journey? And what are the kind of milestones you are looking at especially the techs coming on board now and even the supplies to be BMW starting? And generally, if you can just comment on the directional trends on the profitability in the EV business because scale is something we've been working to us. So generally, are the economics of the EV business getting better with every passing month as you still, as well as we can ramp up volumes? If you can just make some positive color on the EV cost structure again, sir?.
This quarter, it's the highest number of it. I think we have done almost 60,000. Okay, this 11%, we have delivered the , okay? That is one important point of all them all.Second is, international market, we have started getting into some of the markets is. Now in the next 2 to 3 quarters, I should be available in many markets. We want to take it to many markets. And at some point of time, I see we will also get into Europe. So there is a very clear strategy plan and a very clear network plan we have put, and we will take our EV in every market. And of course, with a product like TVS, latest and international markets, both the developing and developed markets will be the key. And we are also looking at a pipeline of products in the EV side coming in the next 4 quarters. So we will have a range where it will be delighting the customers in Indian market as well as in the international market.
And sir, talking about pipeline, by when do you expect to take the net 3-wheelers in the domestic market in new cities? And also by when can they still the cargo version because you never uncovered before the tie? And how is the business opportunity looking at because we don't have much exposure to the domestic 3-wheeler market historically? So how should one look at the EV launch? And is it a meaningful market you or meaningful volumes you're starting to get in the domestic market?
Product is getting ready. I think we are very confident that our business will do well. And also the launch, I can give you more color on which markets we are planning to on and how we are going to go on, but we are pretty confident on the three-wheeler EV. And it will be available closer to launch, I'll give you more details on that. We are looking at focusing on 3-wheeler. Definitely, because this is one area we need to improve. And the 3-wheeler in the international market, we have extremely well. And there also, we will use this 3-wheeler going forward.
And sir, final one on the investments in subsidiaries, Singapore, where is this money largely going in the INR 227 crores? That's the last question.
The investments are for our future. It is a combination of some investments are one for TVS credit services, for almost INR 100 crores, then recently and late. And some of the other new investments we have also done in serious digital and TVS, so these are all static investments for future. And if you look at it during last year's quarter so, we made investment of almost INR 300 crores in Singapore and same was shown as the kind of share application money spending on data investment. So please understand data investment for future, and we are pretty confident that this will start seeing the results going forward.
Thanks a lot. Thank you.
The next question is from the line of Gunjan Prithyani from Bank of America.
Just an extension of this investment in subsidiaries. I see 2 items there. One is invested to INR 236 crores and one is this investment of about INR 100 crores. Now this investment, I'm assuming is for the private equity sale we did during the quarter. And investment breakup, can you reconfirm again how much of it is going to TVS credit and other subsidiaries like a little bit more color on these 2 line items, please?
I gave you credit services was almost INR 100 crores during this period. And the remaining on was about close to INR 180 crores of crore and CMG another INR 190 crores. So these are aspiran and other things are for TVS credit service or serious digital, which are crystolitic in nature.
Okay. And sir, just trying to get in terms of incremental investments, like with not the product is probably now a lot of spends have been done. So if I think about outside of TVS credit, the other subsidiaries, how do you see the magnitude of these investments? Do you see these incrementally coming down from where they are right now? And also, if you can share some color on the losses for this quarter because I see there is a bigger loss from the subsidiaries in this quarter versus what we've seen in the past few quarters, almost if I look at just the pure can solihull minus stand-alone of INR 120 crores loss? And within this period, credit has been profitable, right? So, do you see this sort of line item continues?
As I understand, as you've all, we have a very clear product plan and any such super premium brand requires not one product, you may have other series of products we are uniquely invest in sand development and product regimen. That is what is going on, and that will continue for the next 8 quarters. With respect to this particular quarter, please understand that if you look at the TVS business. I think, morally, the entire UP market is going to less growth, high inflation and that is also affecting the demand. So whatever the top line we were looking at, there are concerns that we are pretty confident because these are things which is beyond your pectoris times. Then you have to be calm and appreciate and then control all the dynamics of the costs. But I'm very confident that these are investments which are the right direction TVS companies and these are these are products which are definitely going to helpers in terms of going forward quarter-after-quarter, you will see things changing in the EV business.
Okay. So bulk of that is coming from the bike business because of the macro issues out there?
Look, I think overall, there is a stress in the European market. Water we have seen in the international market cost or TVS so far, we're able to see similar or common market sale are seeing in the rate of hypertension market, whichever we have seen. So I think this, we have to redo and we have to be a little bit patient and firm and we have done the menin the right strategic areas, and we are very concerned that we will get once the industry is bad and which will happen. Going forward.
Sure. And sorry, sir, just a little harping on this, but just the pace of investments in Norton, do you see that substantial has done and incrementally, it comes up like any color on the pace of investments in Norton over the next 12, 18 months?
I can give you only confidence by saying that your people have our same questions on treated areas, and we are consistently now delivering profit after profit. Time for staying back there and banks were putting the effort of a new product there. I think you gave me a few more quarters [indiscernible].
Okay. Sure. And second question that I have on the export outlook. Can you give us a little bit more color as to what you're seeing on the ground in terms of have you seen retail market recovery with a little bit color on various markets, what's happening in Nigeria? And how big is this EV opportunity? Is it more about Southeast Asian markets? Or is it beyond Southeast Asian markets?
International markets, according to me, including Africa, we saw times in terms of currency revaluation and also currency availability. Slowly, it is settling down. So I have of the view that the retails are picking up. We should understand that the entire African market is all about taxi, okay? Commuting will happen. There are investments we had or infrastructure and many things are happening. At this point of time, understand there is a strength in the market. But according to me, the bust is over. But the recovery, you have to be patient. But what is good ones is we don't keep more stocks in the market. We align with the retails in the market, and I'm pretty confident that the retails are growing for us. And we will also grow in line with that, our numbers will also grow. A little bit more patient is required because many of these markets have gone through high inflation, okay? All the cages or some of the side effects of the war, whatever we have seen. I'm very confident that slowly and steadily, you will see months alert month, quarter after quarter with Devanga market coming back. okay? So I'm confident that on EV, I think both the ASEAN markets, in my opinion, ASEAN markets and African markets will move towards EV, okay? There are early signs. But what is most important is we need to invest behind product and invest we end customers because market by market, we have to look at what is the product we would like to make a customer, like we did iQube, we are now doing the asset like we are now coming up with growth on a quarter product plan. I think this is very, very important. And that is sensor. We invest behind R&D, we invest behind marketing, we invest behind product. And most importantly, we work for the customers because customer needs to succeed, nothing else. You focus on the customer, I'm pretty confident that we patient 1 or 2 quarters, we will succeed.
Sure. Thanks much, sir. I'll join the back the queue.
The next question is from the line of Mr. Shanshan Wali Mutya from CoBank.
My first question is on the product mix. I think this quarter, the raiders and Jupiter have done extremely well, maybe slightly at the cost of the Apache. So just trying to understand, are we seeing customers incrementally switch to the raider from the Apache platform? I just want to understand your thoughts on how the mix is being managed.
Of all, it is not at the cost of a battle clarify because Apache is a completely different set of customers, different set of brands, okay, either focus on different set of customers. And definitely, there is no interaction between Jupiter to Apache, okay? So serious signs focusing on the customer separately, and we focus on very, very clear regimentation of the customer, Apache is a better set of customers, either it forces customers and secretory product. One of the most important is we have to focus and deliver the numbers, which is what is happening. And we are extremely happy with the way with the Apache is also moving in the market. Raider is moving, Apache more, Jupiter is moving, okay? And we are definitely looking at improving the product mix going forward, quarter-after-quarter, you will see, okay? And we always look at -- I always tell you that we don't keep more than 25 to 30 days of stock because we want the best mine to go to the customer. So we moderate based on our customer retail, our discussion, and we want to adhere to that very, very strictly. And as you know, we are completely cash and carry over in the domestic market. We don't give any credit. So this requires some ups and downs because we align with our principle of giving fresh vehicles to the customer. That doesn't mean that some domestic market is affecting something else. That doesn't happen in the period. I hope I have clarified.
Got it. Got it. That's helpful. My second question is on the product pipeline that you spoke about earlier in the call on electric 2-wheelers. So just trying to understand, I mean, we've had a successful launch of the IQ we've launched more premium TVS X. So in terms of covering maybe some of the lower price point electric 2-wheelers categories may be slightly lower, lower or battery formats. Over the next 4 quarters, could you just outline some of your plans? Is it sort of one product per quarter sort of run rate that you were referring to before? Or is any color on that pipeline would be explain be helpful?
You have seen our ice product range started from Jupiter, we have seen now digital 125. So our principle will be to look at the customer, customer segments and focusing on that, okay? To me, price and -- have just imposed which customer doesn't see. Customers see products, they see the total cost of operation. They look at the overall flat case, price is only 10. At kilowatt another area. So you have to look at a holistic like I always say, IQ is a full dive for the customer. He gets all the benefits of 10 or 125 cc biter with completely connected, completely leaving all the lists of EV. So customer look at on that point of the that's exactly the way we look at also from the company side. I promise you closer to lot I'll give you 4 quarters line cost, which product, which quarter we will be doing it.
Perfect. That's helpful. And just lastly, I had a housekeeping clarification. If you could just say the export and the spares revenues please?
Q1 export revenue?
Yes. Export revenue and spares revenues could share, that will be helpful.
Yes. I think this quarter, our export revenue is about INR 28 crores. And where car is -- Part about INR 765 crores. For Q2, okay. What the number I'm making is for Q2.
The next question is from the line of Ami Pirani from JPMorgan
My first question is actually on the TVS X. You have launched at a very high price point. So given the customer feedback that you have received till now, what do you think the potential of such a product is in India? And should you we view it more as a product for the export markets like Europe and --
India as part of the biggest market. Premium and super premium is going to be all of the India, okay? So in India is the first market for 80 products or TVS will be relenting, okay? So EVs do extremely well because these were premium electric crossover and it has definitely, definitely going to have many things which are numbers. And this number, price is only one is a caster package. And when we looked at the package and there are so many things which are due in less that time, I'm very sure it is going to derive the customer. It is going to redefine completely the premium products in India. It is completely something where all of us can be proud to drive and develop and made in India. So global benchmark in that. So if it is going to redefine the Copa premium and premium category in India. Not only in India, definitely, this is a product which we also launched in every market, including the upmarket. So we have a very clear strategy selling that PBFX is going to redefine India. It is also going to be a selling TVS is global now. I would like to put it exactly.
Understood, sir. And sir, if I can add, any initial feedback because I think you showed a version of this at the Indonesia motorcycle show recently in partnership with some Singaporean company ion mobility. Any initial feedback and any time line for launch in that market?
Very positive, very positive subset deliver the numbers of India, which we are planning just after Vivali as we promised. And then possibly next year, we want to start in any market, including Indonesia. I would put it like that.
Understood. And then just lastly, one question on Motor. I think you have finally launched the newly engineered vehicles like the Commando in the U.K. market. So again, any initial response from customers as well as any time line for a global launch, including India?
See, these are products, all of you know that Aston had so many customers demanding many products. So we are trying to major some of the spending requirements from some of these customers. That is why we have delivered the product, okay? Now we are completely redefining using more team and TVS team to come up with a very prudent product plan for the premium category. What has already started very clear lineup have put in terms of the product and when it will be delivered. I'm very happy with the way we are investing and putting the product. And I'm pretty confident that going forward, you will see the started coming into the market closer to 25,000 crores I can share more information, okay? But investors closes going to delight the customers go.
The next question is from the line of Susana from Motilal Financial Services.
A couple of clarifications. One is, you indicated that we have invested INR 100 crores in TVS credit. So this is over and above divestment of INR 100 crores, which happened we will lift separately.
Repeat the question.
Most dot com says that we have divested INR 100 crores in company convertible preference shares of U.S. credit. So beyond this, we had invested INR 100 crores as well, is it?
No, no, so we invested INR 200 crores. At Q2, we have INR 15 INR 100 crores. So INR 100 crores is for the first.
And given that we have already invested about INR 850 crores in first half, how you look at total investment budget for FY '24, we're only looking at INR 800 crores to INR 1,000 crores, but we are already at about INR 850 crores in first half. So how do you look at the investments for the full year?
First half is623, correct? And whatever we gave a guideline that this year, we'll be looking at close to INR 800 crores to INR 900 crores, that will be the type of investment we look at.
Okay. INR 800 crores to INR 900 okay. Got it.
And CapEx will remain at about INR 1,000 crores, right? Is going to be on the EV side.
Right. Okay. And for Apache, we have seen some bit of recession wholesale volumes in recent months. Is there any supply side issues there? Or is it --
Apache is for a different set of customers, and we are seeing excellent full in the market. But we understand we have to look at the market in terms of return different customer segments and the different customer segments, we are seeing Apache moving in the whole issue. And right there, it's a different kind of customers, there always is moving in the right direction. But please remember we normally look at keeping 25 to 30 days of stock. And we want to continue to use the fresh vehicles with the customer. That we see moderating returning upon how the customer are retails are happening in the market.
Sure. But is there any correction related issue there given that [indiscernible].
There is absolutely correction.
Got it. And lastly, if you can share the ULP and rate for the quarter?
You want repeat?
Yes.
That's just a minute, it is about 82.5%.
82.5%. Great.
The next question is from the line of Mr. Mumuksh Mandlesha from Anand Rathi.
So can you talk about the new market expansion potential, like Bendine. And can you talk about the other major markets, which company plans to and going ahead, which are major markets with a more addressed by the company?
See, let me not only look at customer but also LatAm market. I think there is a great opportunity for the kind of products that we have in the LatAm market. The size of the market is so big, lata and Ceras not the best range. So we have started the journey focusing on leveraging Apache, lavaraging raider, leveraging other encore. We are also trying to leverage some of the products from Indonesia. So the next strategic focus will be the on up countries. So you will see disproportionate focus in the LatAm market because this is a market which will do extremely well product in the future. I think we started focusing earlier in Africa, Afica is doing very well for us, and we have started focusing on LatAm. So this is a great opportunity for continously establish LatAm.
Got it, sir. And also, can you talk about the volume potential for the BMW that we see for the viable market, sir?
See, BMW fees, they have their very clear plans, okay? And they will be launching sometime next year just after the winter, I think March, April. I think the production has started. I think the initial feed are very positive. Our numbers, I may not be able to give you guidelines because it is their plan. So they will definitely give -- looking at the product and the feedback whatever BMW has shared with us, I think it is going to be an outstanding success in the market.
The next question is from the line of Mr. Pramod Amthe from Incred Research Services Private.
First question is with regard to the increase in inventory in the P&L. So this is the second successive quarter we are increasing. Is it all to us this quarter seems to be much more lumpier compared to last quarter. Is it all related to finished crudes or raw material?
Can you say what is the question? I didn't hear properly.
Sure. So what I was referring to is increase in inventory of almost INR 260 crores you show in P&L, this is on top of the INR 100 crores of last quarter. So almost around INR 350 crores of increase, is this odd?
That is only because of the season because normally, all of you know that the season PAT and Diwali, we have to make sure that there are no life stores in production. So it is a very prudent call on the company to keep the material stock, especially the input material.
So what's the number of days you have in terms of stock on finished goods and raw material?
I told you we are always looking at, for example, end of the fee, we will have less than 4 weeks of stock.
Sure. And the second question is with regard to the iQube. Looking at the results and considering that you are significantly gaining market share and volume in the quarter, and this is in spite of the same incentive substantially cutting down. So is it fair to assume you will be making similar margins as a corporate margin on the iQube in spite of these payment anti going off? Is that a fair assumption? Or is it a drag on the profit?
Please understand iQube is a completely thought, okay? Last time also, as I said, that we are making a positive contribution, okay? It is an investment behind new technology, new area, okay? And we have to be patient, we have to be patient because that will start yielding better and better results going forward, okay? Beyond that, I think we have to look at as an overall company, how we are moving in terms of investments. To me, EV and the product range, I think we have to be looking patient. But it will sell in there going forward because there are many things which are going to help us the telcos are going to come down, scale where they only can help you optimize the read option supply chain. More in those products you launched in India in many markets, you will have opportunity to increase. So the strategy what we believe in customer, customer customer, delighting the customer, growing the top line by launching a range of products in every segment. These 2 are priority 1 and 2, and then you will start getting the benefit fully, benefits of cost and sustainable growth and EBITDA profit. So that strategy will continue as well as TVS FXP. So I don't want to give us any guidance separately only.
Sure. Sir, on this question was this positive contribution comment was preempt or even the post-fact you see the positive contribution continue on the iQube?
Positive contribution can has already been cut. All of it all it has been cut, okay? So I think it's a factor of overall volume. It's a factor of overall cost. The sell technology changing, okay? And the overall volume going up, okay? And future, the new products what we are playing is to launch and overall volume again going up. So expect to compete for many strategies and that focus will continue.
The next question is from the line of Mr. Raghu Nandan from Nuvama Institutional Equities.
Congratulations, sir, on good numbers. Sir, on the festive season, Navratri growth is in double digits as per VAHAN, considering this strong festive season, can you talk a little bit about urban and rural demand? You indicated that urban demand is very strong. How is Rosen doing?
See, rural demand is expected. We understand rural area, how does it affect? Thanks to the kind of changes in the registration and also the kind of transition to BS VI, also the art insurance costs. So if I look at a hit are all fair. The cost for us, if you look at the install products, which are high demand in the roller market, but prices have gone up by 5%. The income levels are not gone up. Now they are getting the confidence that they won't be locked down. The worries about the pandemic, the worries about hospitalization has come down. I think we have to be a little patient, India 200 rural. And unfortunately, what has happened is this year, all of you know that certain markets, we had much higher. Certain markets, the decision more than 35%. There is an enzyme which Sanofi got through. So it's a question of now over confidence has been growing, the income levels are going up. They're not worried about any more hospitalization. I think time will come there and infrastructure investment from the government is going on in a very nice way. I'm pretty confident that rural will come back. We have to show little patient, okay? And definitely, the retail finance companies are also definitely supporting. So I think it's a question of time, okay? And all these products will do very well. So when you look at the entry-level product, starting from conferential motorcycles, they had a huge shift and some of the markets I hear that all of you are in the tractors are for a huge shift. So this is improve because from the worry sum, they have not started earning income, okay? I am able to get every indicator that if you are worried definitely the consumption of many artics in the rural are going to be better and better. I'm very confident that the profit will come that, okay? And when the price has now 48%, their income has not gone up 40%. We understand that. So we have to be a little bit more patient comes to rural.
Sir, your associate company, a Ilias in electric motorcycles on TVS launching more price competitors, electric motorcycles, what would be your thought process? What kind of time line you within the search considering players like Ola are getting into this segment?
I don't know about Ola, I respect all my competitors. We have a very clear segment will plan, closer to the launch plan, I will let you know what kind of products and the statements we are looking at, okay? And I'll definitely highlight much before the launch.
Sir, on the electric scooters, their profitable contribution revenue and on PLI it seems some of the 4-wheeler OEMs have received approval. Are you expecting to get PLI approval and incentives in second half of this year?
We are very closely working with a PLI scheme, and we are confident that previous will qualify. And I think it is a working process.
Thank you, sir, wishing you all the best.
The next question is from the line of Mr. Arvind Sharma from Citi.
Sir, 2 questions from my side. First on the Jupiter versus iQube since you said that iQube virtually build all the expectations that Jupiter has. So in your interaction with customers, has there been any impact on Jupiter demand versus iQube overall looks strong, but in your reduction customer, is there any shift from repeated to iQube?
See, currently, the overall site market share category share that may not use the market share. over Mandan 2-wheeler, currently, the scooter is about 30%, 32%, okay. With the EV in scooter, I'm expecting this 32% will significantly this category share of scooter will go up. And there will be opportunity iQube to grow and scooter to grow. So there is more because the here has got a strong brand preference more in scooters. So having an iQube will grow help us to grow it faster and better.
Sure. For the market share gain comment. Sir, one very specific question to the notes on account, the other income of INR 37.55 crores, you said a valuation of our investment with investment, if you said?
It is the supply chain solutions. Yes, it is from sub media supply chain solutions.
Okay. And last quarter was also similar last year, quarter versus around INR 57.6 crores. What was that, sir?
I'll have to check. I think you have to give me some time.
No worry sir. That's fine.
The next question is from the line of Mr. Nishit Jalan from Axis Securities Limited.
Just queries with regards to the business generally in the international market, we have been seeing that either OEMs or for production of their own batteries or they are entering into joint ventures with battery manufacturers. So going ahead, what is our strategy with this regard?
I am not able to understand, there is some kind of the low to volume and some kind of a back of noise. Can you repeat the question, please?
So my query is with regards to the battery manufacturing side, some of the OEMs since in EV or Bendine a major component of your cost. So some of the OEMs are going for their own production line and some OEMs have entered into a long-term strategic partnership with at manufacturers. So going ahead for TVS, what will be the strategy with regards to the --
No, we will study very closely. Currently, the battery management system in India is completely designed and developed in-house. We only 4 series. So the strength of TVS is our design and development capability and investment behind that. Now when we go to various countries, that is the strategy which will be above and we will let you know what will be our strategy going forward and then we decide which country and how we are planning to go.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing remarks.
First of all, thanks to all of the customers, as I highlighted the quarterly operating revenue crossed INR 8,000 crores for the first time, and we grew ahead of the industry, thanks to customers and the kind of product portfolio, what it has got. Operating EBITDA margin, with cost improved to 11%, EBITDA is 11% is the highest extra profit after tax across 1,000 crores. And previous iQube, thanks to all the customers. Thank you for the full stake in previous and previous quality. And this will give us enough energy to put our product plan into the market and take it to the next level in the domestic market as well as international market. With an ongoing focus on consumer, customer quality, we are confident of growing ahead of the industry. And we will continue to leverage our scale drive, focused premiumization, sustained material cost reduction and doing the right investment between products and marketing. We will build serious brand globally, and we will continue to grow our EBITDA going forward. Happy to hear from all of you and your family and thank you.
Thank you, sir. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.