TVS Motor Company Ltd. sees a credit rating action

The latest CARE Ratings rationale, published on July 21, 2026, details a total rated debt and facility portfolio comprising both Non-Convertible Debentures (NCDs) and various bank facilities.

Debt Composition

The rated instruments are categorized into NCDs and bank facilities as follows:

• Non-Convertible Debentures (NCDs): A total of Rs 1,000 crore in NCDs is rated, consisting of a new assignment of Rs 675 crore and existing NCDs totaling Rs 325 crore ^[1].
• Bank Facilities: The company has a total of Rs 3,658 crore in rated bank facilities, broken down by facility type:

- Long-Term Bank Facilities: Rs 2,100 crore ^[2]. - Long-Term / Short-Term Bank Facilities: Rs 950 crore ^[2]. - Short-Term Bank Facilities: Rs 608 crore ^[2].

Maturity Profiles

The maturity profiles for the long-term debt components are as follows:

• Proposed NCDs (Rs 675 crore): These instruments have a tenure of 5 years with a bullet repayment at the end of the fifth year ^[3].
• Long-Term Bank Facilities (Rs 2,100 crore): The repayment timelines for the existing term loans extend through March 2030 ^[4]. The specific maturity schedule for these facilities is:

• Note: The "Proposed" category of Rs 885.78 crore within the long-term bank facilities does not have a specific repayment term disclosed in the rationale ^[4].**

The provided documents do not contain the specific credit rating rationale or the quantification of liquidity buffers (such as unencumbered cash or liquid investments) used by CARE Ratings to support the 'Stable' outlook.

The available filings are limited to credit rating intimation letters and annexures, which detail the rated facilities rather than the underlying liquidity analysis. While these documents quantify the company's total rated debt and bank facilities, they do not disclose the specific liquidity metrics or buffers that underpin the 'Stable' outlook.

Rated Facilities Overview

The provided annexures quantify the following rated facilities, which represent the company's access to credit rather than its current liquidity buffers:

Notes:

• The total facilities figure of Rs 4,108.00 crore is derived from the sum of long-term, short-term, and fund-based limits reported in the annexures ^[5].
• The documents confirm that the ratings were reviewed based on FY26 (Unaudited) performance ^[6], but the qualitative rationale and specific liquidity buffer quantification are not included in these intimation letters.

TVS Motor Company’s (TVSMOTOR) leverage profile, as assessed by CARE Ratings in its July 2026 review, reflects a strong credit position consistent with its 'AAA' rating, characterized by robust interest coverage and manageable debt levels relative to its peers.

Leverage Profile Comparison

The following table summarizes the most recent credit rating disclosures and reported leverage metrics for TVS Motor and its major two-wheeler peers.

• Note: Metrics are based on consolidated financials as reported in the most recent available period. Comparability is limited by differences in business models, particularly the inclusion of financing arms in consolidated figures for some peers.*

Analytical Context

• TVS Motor: CARE Ratings reaffirmed the company’s 'CARE AAA; Stable' rating for long-term bank facilities and NCDs, citing its operational and financial performance for FY26 (Unaudited) ^[1]. While the consolidated interest coverage ratio (3.18x) appears lower than peers like Hero MotoCorp or Eicher Motors, this is largely driven by the consolidation of its financing arm, which carries significant debt ^[7].
• Peer Positioning:

- Hero MotoCorp and Eicher Motors: Both maintain exceptionally high interest coverage ratios (exceeding 89x) and negligible debt, reflecting their status as cash-rich entities with minimal reliance on external leverage ^[12]. - Bajaj Auto: While Bajaj Auto’s consolidated interest coverage (12.46x) is lower than Hero or Eicher, it remains significantly higher than TVS Motor’s consolidated figure ^[10]. Bajaj Auto’s net debt-to-EBITDA (1.25x) reflects its recent strategic investments and capacity expansion, yet it maintains a strong credit profile ^[9].

Implications

The 'AAA' rating assigned to TVS Motor by CARE indicates that the agency views the company's leverage as appropriate for its business risk profile, despite the higher consolidated debt levels compared to pure-play manufacturing peers. The agency's assessment likely adjusts for the capital-intensive nature of the financing subsidiary, focusing on the standalone creditworthiness and the company's ability to generate internal accruals to fund its capex plans ^[6].

Material Caveats

• Consolidation Basis: The leverage metrics for TVS Motor and Bajaj Auto are heavily influenced by their respective financing subsidiaries. Direct comparison with Hero MotoCorp or Eicher Motors—which have different capital structures—should be interpreted with caution.
• Unaudited Data: The FY26 metrics cited are based on unaudited financial performance as referenced in the credit rating rationales ^[6].*