Hold Tata Motors Passenger Vehicles: target of Rs 375: ICICI Securities

ICICI Securities's research report on Tata Motors Passenger Vehicles

Tata Motors Passenger Vehicles (TMPV) reported weak operating performance. JLR reported operating loss (vs. low single-digit EBITDAM estimate) owing to a cyber incident-led production shutdown. Domestic PV margin performance also undershot our estimate. Near-to-medium term outlook for JLR remains muted given the challenging demand environment. Likely continuation of elevated VME spends and slow and gradual passthrough of US-tariffs, over a period of 15–18 months, is reflective of a bleak demand situation. TMPV lowered its EBITM guidance to 0–2% (vs. 5–7% earlier) and FCF expectation turned negative. Domestic PV business, however, may see healthy revival supported by GST-cut and new launches.

Outlook

Downgrade from Add, to HOLD, with a SoTP-based revised TP of INR 375 (earlier INR 466*).