TVS Credit Services Limited
Rating Action
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. 1 crore = 10 million Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale Crisil Ratings has reaffirmed its ratings on the bank facilities and debt instruments of TVS Credit Services Limited (TVS Credit; a part of the Chennai-based TVS Motor group) at ‘Crisil AA+/Crisil AA/Stable/Crisil A1+’.
Crisil Ratings has also withdrawn its rating of Rs.800 crore of NCDs on received independent confirmation that these instruments are fully redeemed. The withdrawal in line with its withdrawal policy (See Annexure 'Details of rating withdrawn' for details).
The ratings continue to factor in the high strategic importance of TVS Credit to TVS Motor Co. Ltd (TVSM) as a key financing arm supporting the latter's vehicle sales.
TVSM’s volume growth outpaced the industry growth in fiscal 2026 and has also helped it improve its market share in both motorcycle and scooter segments. Volume growth in domestic markets was largely buoyed by the revision in goods and service tax (GST) rates on two-wheelers (2Ws), while exports also witnessed strong demand from African, Latin-American and other markets such as Sri Lanka and Nepal.
The ratings on TVS Credit also factor in the steady growth in the company’s scale of operations and strong process orientation that has enabled improvement in asset quality over the past few years. These strengths are partially offset by average, but improving, earnings profile and inherent exposure to risks related to the modest credit risk profile of borrowers.
TVS Credit has a diversified presence across asset classes, with AUM of Rs 30,300 crore as on December 31, 2025, growing by 11.5% year-to-date over this period, from Rs 27,179 crore as on March 31, 2025. For fiscal 2025, the AUM growth had moderated to 3% due to company limiting its disbursements in new tractor and personal loan portfolios. However, the momentum revived in fiscal 2026 driven by two-wheeler and consumer durable portfolios.
Asset classes include two-wheelers (29% of AUM), tractors (14%), used cars (8%), consumer durables (19%), used commercial vehicles (CV; 11%) and personal loans (15%). Disbursements for nine months of fiscal 2026 were Rs 24,422 crore against Rs 26,297 crore for full fiscal 2025 and Rs 25,018 crore in the year prior.
The rating on the perpetual bonds reflects the adequate buffer maintained by TVS Credit over the regulatory capital adequacy requirements, and high financial flexibility enjoyed on account of being a subsidiary of TVSM. TVS Credit has maintained a cushion of 2-4% over the regulatory minimum capital ratio in the past few years and Crisil Ratings believes that it will continue to maintain adequate cushion (refer to Crisil Ratings publication 'Criteria for rating hybrid instruments of NBFCs and HFCs' for details on the Crisil Ratings approach for rating such instruments). |
Analytical Approach Crisil Ratings has assessed the standalone business and financial risk profiles of TVS Credit. Furthermore, the ratings factor in the expectation of strong support from the parent, TVSM. This is because TVS Credit and TVSM have extensive business and operational linkages and a common brand. Crisil Ratings believes that TVSM will continue to provide support to TVS Credit considering the strategic importance of the entity and shared name and majority shareholding. |
Key Rating Drivers - Strengths Strategic importance to the parent and expectation of strong support from it As a captive financing arm, TVS Credit remains integral to TVSM's plan to increase its market share. TVS Credit finances 18-19% of the parent's domestic sales by volume. It operates through TVSM’s ~1,100 strong dealers and more than 3,100 sub-dealers for sourcing clientele. The synchronised planning and sales efforts highlight the strategic importance of TVS Credit to TVSM.
TVSM’s revenue grew at compound annual rate of ~20% during fiscal 2022-2025 and Crisil Ratings expects TVSM to register healthy double digit revenue growth of over 20% in fiscal 2026. Consolidated operating profitability (excluding TVS Credit Services Ltd [TVSCSL; 'Crisil AA+/Crisil AA/Stable/Crisil A1+’] is estimated at ~11% in fiscal 2026, (~10% in fiscal 2025, 8.5% in fiscal 2021) with improvement being driven by better operating leverage, increasing premiumization of product offerings, tighter control on costs and reducing losses at overseas subsidiaries. TVSM is expected to maintain double digit revenue growth over the medium term, with its operating profitability settling between 11-12%, supported by moderate volume growth and calibrated price hikes to offset higher raw material costs, since March 2026, following the middle east crisis.
TVSM’s financial risk profile continues to improve, driven by healthy cash generation and prudent capital spend. Ergo, despite rising debt due to issue of of bonus cumulative non-convertible redeemable preference shares (NCRPS) of Rs.1900 crores in fiscal 2026, interest cover ratio still remains healthy at over ~10 times. With no major capital spend planned, which will involve material debt raise, debt protection metrics are expected to witness continued gradual improvement over the medium term.
TVS Credit continues to receive strong financial, operational and management support from TVSM. The total shareholding (direct and indirect) of TVSM in TVS Credit stood at ~81% on a fully diluted basis as on December 31, 2025. Over the last two fiscals (2025 and 2026), the parent infused around Rs 455 crore of capital into the company. Of this, Rs 283 crore was infused during fiscal 2025 and Rs 172 crore in fiscal 2026. In fiscal 2026, apart from the capital contributed by the parent – TVSM, TVS Credit also received Rs 22 crore by Premji Investment, Rs 4 crore by HDFC Bank and Rs 3 crore by PHI Research Pvt Ltd.
Regular capital support like this, in addition to internal accruals, has resulted in adequate capitalisation, with TVS Credit having networth of Rs 5,801 crore as on December 31, 2025.
TVSM also provides managerial support to TVS Credit. There are five directors from TVSM on the board of TVS Credit and many senior management personnel have been with the TVS group for several years. These factors and the shared brand name reflect robust linkages between TVSM and TVS Credit; further in Crisil Ratings view, this implies a strong moral obligation on the part of TVSM to support TVS Credit.
Improving scale of operations The scale of operations has improved significantly over the past few fiscals. Loan book grew ~11.5% to Rs 30,300 crore as on December 31, 2025, from Rs 27,179 crore as on March 31, 2025 (Rs 26,406 crore as on March 31, 2024). For the three fiscals till 2025, AUM grew at a CAGR of ~24%. However, growth in fiscal 2025 was subdued primarily on account of the degrowth in the new tractor and personal loan portfolio. Other segments such as consumer durables, used car, used CV and two-wheelers – exhibited steady growth. Disbursements in the nine months of fiscal 2026 stood at Rs 24,422 crore against Rs 26,297 crore in fiscal 2025 and Rs 25,018 crore in fiscal 2024; Consumer durables formed ~43%, two-wheelers ~21% of total disbursements followed by personal loans and tractors at 10% and 6%, respectively in nine months of fiscal 2026.
The company had ventured into products such as consumer durables, used CVs, personal loans (mainly cross selling to existing customers) and business loans to enhance product diversity. As a result, the contribution of two-wheeler loans gradually declined to 29% of the total loans as on December 31, 2025, compared to 42% as on March 31, 2020, even as this segment continues to grow. The company has also expanded its presence to 29 states with no single state having more than 15% AUM concentration.
Strong process orientation has enabled improvement in asset quality in the recent past The company makes significant investments in people, processes and systems to ensure strong origination, underwriting and collection processes. Borrowers are categorised into multiple risk brackets based on their origination characteristics and repayment patterns to focus collection efforts on accounts that show higher propensity for delays. Furthermore, senior management have worked with TVSM's dealers closely, establishing relationships and enabling better co-ordination in terms of origination and collections for two-wheeler loans. Strong systems and processes are expected to enable TVS Credit to maintain sound asset quality.
On account of a conservative write-off policy, the gross stage 3 assets (GS3) stood at 2.7% as on December 31, 2025 and 2.9% as on March 31, 2025. Including write-offs, GS3 assets stood at 4.6% and 6.3% on the respective dates. The reduction was on account of reduction in write off in the two wheeler and consumer durable segments. However, the tractor portfolio still shows higher delinquencies with the GS3 at 7.4% in nine months of fiscal 2026 compared to 7.7% in fiscal 2024 on account of adverse monsoon in certain geographies. As a result, the management has cautiously curtailed disbursement in the new tractor portfolio resulting in slower growth in overall disbursements.
Going ahead, the ability to manage asset quality via efficient processes and controls as the company scales up and diversifies into other product segments, will remain monitorable. |
Key Rating Drivers - Weaknesses Average, but improving, earnings profile Overall profitability improved in the first nine months of fiscal 2026 and fiscal 2025 compared to earlier years due to reduction in credit costs and yields remaining range bound. Yields on the lending portfolio (AUM) stood at 21.4% (annualised) for nine months of fiscal 2026 and 21.6% for fiscal 2025 (21.4% for fiscal 2024), backed by steady growth and presence in high-yielding segments as well as competitive cost of funds. However, given the small ticket size and large distribution and collection infrastructure, operating costs, while improving, have remained high with operating expense to average total assets ratio at 8.6% (annualised) for the nine months ended fiscal 2026 and 8.3% for fiscal 2025 (8.9% for fiscal 2024). Credit cost, also moderately high, has corrected to 3.7% during the first nine months of fiscal 2026 from 4.4% in fiscal 2025 and fiscal 2024. Provision coverage ratio for GS3 assets stood at 54% as at the close of the first nine months of fiscal 2026.
The company reported profit after tax (PAT) of Rs 657 crore and return on assets (RoA) of 2.7% (annualised) in nine months of fiscal 2026 against Rs 767 crore and 2.6%, respectively, in fiscal 2025.
Going forward, the ability of the company to improve its operating efficiency and manage credit costs will be monitorable.
Exposure to risks related to the inherently modest credit risk profiles of borrowers The borrowers in most of the operational segments have inherently modest credit risk profiles and limited access to bank finance. Industry delinquency levels in the two-wheeler finance business, the company's dominant product, have historically remained high on account of the modest risk profile of the borrower and low resale value of the used asset. Having said that, for TVS Credit, GS3 in the two-wheeler portfolio has historically remained better than peers. Furthermore, the tractor book, which accounts for 14% of the portfolio as on December 31, 2025, is linked to the performance of the agriculture segment and the rural economy.
Thus, because of the inherently moderate credit risk profile of this borrower segment as well as higher disbursements across these segments, the ability to maintain asset quality in the near to medium term will remain a key monitorable. |
Liquidity Strong TVS Credit's liquidity profile remains strong. The company's asset liability maturity profile as on December 31, 2025, remains well matched with cumulative positive gap in all maturity buckets. The company had liquidity of Rs 7,100 crore -- comprising ~Rs 3,100 crore in cash and undrawn bank lines of ~Rs 4,000 crore as on February 28, 2026. This is against the debt repayment of Rs 6,962 crore coming due till May 2026. Liquidity profile is also supported by the company being part of the TVS – Venu Srinivasan group. |
Outlook Stable TVS Credit will remain strategically important to TVSM and continue to scale up operations steadily over the medium term. |
Rating sensitivity factors Upward factors
Downward factors
|
About the Company TVS Credit, based in Chennai, is a captive finance company and subsidiary of TVSM. The company was incorporated in 2008 as a subsidiary of TVSM. However, in line with TVSM’s plan to increase its direct shareholding in the entity, they have invested equity directly into TVS Credit since fiscal 2017. TVS Credit is now a direct subsidiary of TVSM, which held 81% stake in the company on fully diluted basis as on December 31, 2025, while the remaining was held by, Lucas-TVS Ltd (4.%; ‘Crisil AA+/Stable/Crisil A1+’), HDFC Bank Ltd (2%; ‘Crisil AAA/Crisil AA+/Stable/Crisil A1+’), Phi Research Pvt Ltd (1%) and PI Opportunities Fund I Scheme II (11%).
TVS Credit commenced operations as a non-deposit-taking NBFC in May 2010. It has scaled up its business and had a loan book of Rs 30,300 crore as on December 31, 2025. The company currently finances two-wheelers (of TVSM), new tractors, used tractors, used cars, consumer durables, used CVs, personal loans (mainly cross selling to existing customers), business loans, gold loans and 3W loans. It caters largely to customers who have limited access to bank financing.
For fiscal 2025, TVS Credit reported PAT of Rs 767 crore on total income (net of interest expense) of Rs 4,766 crore, as against Rs 572 crore and Rs 4,141 crore, respectively, for fiscal 2024.
Notably gearing has remained over 5.0 times upto fiscal 2025, but it reduced to 4.6 times as on December 31, 2025 (5.0 times as on March 31, 2025) and is expected to remain at or below 6.0 times on steady-state basis in the near term to support the company’s business expansion plans. |
About TVSM TVS Motor Company Ltd (TVSM) was incorporated in 1983 as Indian Motorcycles Pvt Ltd, a JV between the TVS Group and Suzuki Motor Corporation (SMC) of Japan; the company came out with its IPO in 1984 and the name was changed to TVS-Suzuki Ltd. TVS-Suzuki was the first Indo-Japanese motorcycle venture in India. TVS was earlier manufacturing mopeds in the early 1980's and was the first player to commence manufacturing of 100cc motorcycles in 1984.
At present, TVSM is the third largest manufacturer of 2w in the world and has global presence operating in Asia, Africa, Latin America and Europe. TVSM has four manufacturing units, three in India and one in Indonesia, multiple distribution centres, and offices serve 80+ markets across the world. TVSM is strategically expanding its international presence by fortifying its EV offerings and strengthening its distribution network across the world. TVS Motor has footprints globally, including geographies like Middle East, Africa, SE Asia, Indian subcontinent, Latin & Central America.
TVSM’s four manufacturing plants are located at Hosur, Mysuru and Nalagarh in India and Karawang in Indonesia. TVSM is the only two-wheeler company to have received the prestigious Deming Prize for TQM |
Key Financial Indicators
#RoA is calculated as: (PAT for the period)/(average of total assets as on start and end of the fiscal)*100. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Yet to be issued
Annexure - Details of Rating Withdrawn
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Criteria Details
|