Accumulate Tata Motors; target of Rs 1089: Prabhudas Lilladher

Prabhudas Lilladher's research report on Tata Motors

We attended Tata Motors' annual analyst meet where the company gave a detailed overview of its Commercial Vehicle (CV), Passenger Vehicle (PV) and Electric Vehicle (EV) businesses and its growth outlook. It aims to be net automotive debt free for the consolidated business by FY25E. The company believes the proposed demerger of CV business will help improve its management and focus. The company aims to improve its EBITDA margin in the next few years while focusing on cost optimization and product mix improvement. In the PV+EV business, the company aims to increase the addressable market with a slew of new launches on the ICE & EV platform and increase its EBITDA margin to 10% and market share to 18-20% by FY27E/FY30E, respectively. We remain positive on Tata Motors based on the (1) healthy growth outlook across business verticals, (2) capex proposed for respective businesses to deliver a sustainable product portfolio, (3) market share expansion in the SCVPU and CPV business, the (4) sustained growth rate in the downstream/spares business.

Outlook

Hence, we keep our estimates unchanged and maintain our ‘ACCUMULATE’ rating with a TP of Rs1,089 based on SoTP valuation.