Buy Tata Motors; target of Rs 352: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Tata Motors

Tata Motors' Q1FY19 performance was a huge disappointment with the company reporting a consolidated adjusted loss at ~Rs12bn against our expectations of a profit of Rs9.7bn. While consolidated revenues were up 14.7% YoY (on a low base) to Rs670.8bn (PLe: Rs711.6bn), EBITDA margin was at 9.5%, lower 40bps YoY (down 360bps QoQ), below with PLe of 10.3%. EBITDA grew 10.5% YoY to ~Rs64bn. Adjusting for forex loss of ~Rs10bn, consolidated adjusted loss stood at ~Rs12bn. This was mainly on account of Jaguar Land Rover (JLR) reporting a loss of GBP210mn. Whole sale volumes for JLR for the quarter declined ~8% YoY leading to revenue decline of 6.7% YoY to GBP5.2bn, with operating margin coming in at 6.2%, lower 170bps YoY / 600bps QoQ and below our expectations of 10.5%. Standalone performance, however, again saw significant improvement this quarter with operating margins coming in at 9.3% (up 240bps QoQ) and adjusted profit for the quarter at Rs13.6bn, surpassing PLe of Rs7.8bn (Non-operating income was significantly higher, up 118% YoY, to ~Rs14bn).

Outlook

We currently factor in ~5% volume growth for the JLR over FY19-20 and maintain "BUY" with the target price of Rs352, where we value JLR at 2.5x Mar'20E EV/EBITDA and Standalone entity at 10x Mar'20 EPS.

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