Neutral TATA Motors; target of Rs 631: Motilal Oswal

Neutral

Motilal Oswal's research report on TATA Motors

Tata Motors’ consol EBITDA margin of 9.2% in 1QFY26 came in below our estimate of 10.9% due to weaker-than-expected performance at JLR and India PVs. Consol PBT was ahead of estimate due to lower depreciation and lower interest expenses. JLR is facing multiple headwinds, which include: 1) tariff-led uncertainty for exports to the US; 2) demand weakness in key regions like Europe and China; and 3) rising VME, warranty and emission costs. Given these factors, management has refrained from giving any guidance for FY26 and beyond. Given the above headwinds, we expect margin pressure to persist for JLR and have factored in 150bp margin decline over FY25-27E. Even in India, both CV and PV businesses are seeing moderation in demand. For lack of any triggers, we reiterate Neutral with June-27E SOTP-based TP of INR631.

Outlook

We expect margin pressure to persist for JLR and have factored in 150bp margin decline over FY25-27E. Even in India, both CV and PV businesses are seeing moderation in demand. For lack of any triggers, we reiterate Neutral with June-27E SOTP-based TP of INR631.

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