TVS Motor Company's Investments in Norton Subsidiary Raise Concerns Among Analysts

TVS Motor Company Ltd's investments in its loss-making United Kingdom-based subsidiary Norton have raised concerns among analysts, who believe that the company is still far from generating meaningful revenue. During the post-Q4 results earnings call, India's third-largest two-wheeler seller's management highlighted that they will focus on developing new product ranges for Norton, expected to hit the markets by the end of the current fiscal year. The investments into the subsidiary are weighing on TVS's overall performance, with concerns raised by brokerage firms. Free cash flow generation of the company saw a sharp decline due to increased investments, muting its free cash flow. Despite some confidence expressed by TVS CEO K.N. Radhakrishnan earlier, analysts at Axis Securities wrote that increased investments have muted the company's free cash flow. The company reported strong financial performance for the January to March period, with net profit jumping 76% to INR 852 crore. Total revenue during the period grew 17% to INR 9,565 crore. For the full year, profit grew by over 30% to reach INR 2,710 crore, while revenue rose 14% to INR 36,309 crore. TVS also recorded its highest-ever sale of 4.7 million units of two-wheelers in the country. However, the better-than-expected performance did not impress investors, as TVS shares closed 3.4% lower. The concerns about the viability of its UK-based business have persisted, with analysts closely monitoring Norton's ability to generate profits. TVS's focus on product development for Norton and the company's financial performance will be closely watched in the coming quarters.