Accumulate Tata Motors; target of Rs 369: Deven Choksey

Deven Choksey report on Tata Motors

Tata Motors’ Commercial Vehicles (CV) business delivered a strong Q2 FY26 performance, supported by a 12% YoY rise in wholesales to 96.8K units and continued focus on profitable growth. Revenue increased 6.0% YoY to INR 185,850 mn, driven by higher volumes, better realizations, and refined pricing. EBITDA margin expanded 122 bps to 11.0%, while EBIT margin rose 180 bps to 8.5%. PBT for the quarter stood at INR 14,930 mn. Mark-to-market losses on Tata Capital’s newly listed investments (~INR 20,000 mn) impacted profitability, resulting in Net Income of INR (8,670) mn. Strong operational discipline drove quarterly FCF of INR 22,000 mn, while H1 FY26 FCF of INR 4,170 mn marked the highest ever for the business. ROCE rose to 45% (vs 37% YoY) and net debt reduced to INR 6,000 mn.

Outlook

We have rolled forwarded our valuation to Sep’27 estimates and value the company at 12.5x Sep’27 EBITDA, arriving at a target price of INR 369 per share and maintaining an “ACCUMULATE” rating.