Chennai: TVS Motor Company, a leading two and three wheeler maker, will demerge its consumer-finance-related investments into a separate listed holding company, marking a significant shift in the TVS Venu group’s strategy, as a financial services business built over 15 years of investment emerges as an independent growth engine alongside its core mobility business.The proposed demerger, approved by the board on Wednesday, will transfer TVS Motor’s investment in TVS Credit Services and certain other non-core investments to the new entity. Existing TVS Motor shareholders, including promoters and public investors, will receive an equal number of shares in the new entity, in proportion to their current holdings. TVS Motor will not retain a direct stake in the new company.“India’s rapidly expanding financial services sector offers tremendous opportunities for long-term growth,” said Sudarshan Venu, chairman of TVS Motor Company. The new structure would give the businesses greater strategic autonomy to pursue opportunities and deploy capital according to their growth priorities, while enabling shareholders to continue participating in the future growth of both businesses, he added.The group is already consolidating its NBFC operations in line with an RBI directive. The consolidation of its NBFCs is expected to be completed by March or April 2027, ahead of the demerger’s appointed date of July 20, 2027, K Gopala Desikan, CFO of TVS Motor, said during the Q2 earnings call.He clarified that the current scheme does not envisage transferring the consumer finance business directly to TVS Credit Services. Instead, the investment in TVS Credit Services, along with other identified assets, will be transferred to the new holding company.TVS Credit Services has a net worth of Rs 6,500 crore and a loan book of Rs 33,818 crore. TVS Credit, together with Home Credit India, serves more than 45 million customers through 100,000 touchpoints across the country.Earlier this year, the group announced the acquisition of education finance company Varthana to expand its presence in secured and longer-tenure lending. It has also invested in Jana Small Finance Bank.Separately, an additional equity infusion of Rs 1,200 crore into TVS Credit Services is under consideration, depending on the business’s capital requirements. However, the management did not indicate a definitive timeline for the infusion.Co eyes single-digit industry growth in Q3, takes price hikesTVS Motor Company expects two-wheeler industry growth to moderate to single digits in the October-December quarter after a strong first half, as a high base and rising material costs temper the outlook. The company has implemented small price increases at the start of Q3 and will review the need for further hikes after Diwali.It expects some festive-season momentum to carry into Q3 but cautioned against extrapolating the ICE two-wheeler industry’s 15% growth in H1 of this fiscal. Industry growth was around 10% in Q1 and nearly doubled in Q2.TVS Motor reported a 52% year-on-year increase in net profit to Rs 1,377 crore in Q2 FY27, as revenue rose 44% to Rs 17,103 crore.
