**TVS Motor’s Ongoing Investment in Norton Raises Analyst Concerns**
TVS Motor Company Ltd’s continued financial commitment to its struggling UK subsidiary, Norton, has raised eyebrows among analysts, who believe the company is still a long way from achieving significant revenue. During the earnings call following the Q4 results on Monday, management emphasized its intention to focus on developing a new product range for Norton, which is anticipated to launch by the end of the current fiscal year.
Several brokerage firms have pointed out that these investments are negatively impacting TVS’s overall performance. One analyst noted that substantial revenue from Norton is unlikely to materialize until the latter half of the financial year 2027. Analysts from Nirmal Bang expressed concerns about capital allocation, highlighting that TVS has heavily invested in foreign subsidiaries, with these investments growing at approximately 25% CAGR over the past five years. Cumulatively, these subsidiaries have incurred losses, primarily attributed to Norton and SEMG.
TVS acquired Norton in 2020 for ₹153 crore in an all-cash transaction. Since then, the company has invested over ₹1,000 crore into the brand, including the establishment of a new plant in Solihull, UK, capable of producing around 8,000 motorcycles annually. The goal of these investments was to develop products for the global market under the Norton brand. However, losses have continued to accumulate, with EBIT losses from subsidiaries, including Norton but excluding TVS Credit, reaching ₹140 crore in Q4 FY25, up from ₹91 crore in Q4 FY24, according to a report from Kotak Institutional Equities.
TVS has not responded to inquiries regarding these developments. Analysts at Kotak also noted a significant decline in the company’s free cash flow generation, which plummeted by 83% to ₹230 crore due to nearly doubled capital expenditures and investments, totaling around ₹4,000 crore in financial year 2025. Rishi Vora from Kotak emphasized the need to monitor the increasing losses from subsidiaries, excluding TVS Credit, as the company continues to bear the costs associated with Norton’s development.
This is not the first instance of TVS facing scrutiny regarding the viability of its UK operations. During the October 2023 earnings call, management faced persistent questioning but maintained a positive outlook. TVS CEO K.N. Radhakrishnan expressed confidence in Norton’s potential for profitability, stating, “Give me a few more quarters, and Norton will start delivering very good results for the company.”
A significant portion of TVS’s investments is directed towards product development for Norton, with the first new product expected to be unveiled soon.
**FAQ**
**Q: What is the current status of TVS Motor’s investment in Norton?**
A: TVS Motor continues to invest heavily in Norton, despite ongoing losses, with plans to launch new products by the end of the fiscal year. Analysts remain skeptical about the subsidiary’s profitability in the near future.
