Buy Tata Motors; target of Rs 127: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal 's research report on Tata Motors

TTMT’s had its toughest quarter ever with net consol losses of INR84b as both JLR and India business were badly hurt by Covid-19 related lockdowns. Unwinding of working capital and weak operating performance led to consol. (auto) FCF being negative at ~INR182b. However, it expects positive FCF in both businesses 2QFY21 onwards. Recovery in both businesses is critical for net debt reduction (INR678b, increase of INR196b QoQ). We expect losses to gradually reduce in coming quarters and turn profitable only from 4QFY21. We have lowered our FY21E loss estimates by 8% to factor in faster JLR volume recovery and cost cutting initiatives. Maintain Buy with TP of INR127.

Outlook

The stock trades at 2.5x FY22E EV/EBITDA and 0.7x P/BV. Maintain Buy with TP of ~INR127 (Mar’22E-based SOTP).

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