Buy Tata Motors; target of Rs 572: KR Choksey

KR Choksey's research report on Tata Motors

In Q3FY23, Tata Motors reported consolidated revenue of INR 8,84,886 mn (+22.5% YoY/ +11.2% QoQ). Revenue from operations for 9MFY23 grew by 20.0% YoY to INR 24,00,346 mn. Calculated EBITDA was at INR 96,430 mn (+42.6% YoY/ +55.6% QoQ). Calculated EBITDA margin improved by 153 bps YoY/ 311 bps QoQ to 10.9%. For 9MFY23, EBITDA grew by 18.3% YoY to INR 1,90,197 mn while EBITDA margin declined by 11 bps YoY to 7.9%. Net Profit was INR 29,577 mn against a loss of 15,161 mn in Q3FY22 and a loss of INR 9,446 mn in Q2FY23. For 9MFY23, Tata Motor’s Net loss narrowed to INR 29,935 mn from INR 1,04,085 mn in 9MFY22.

Outlook

We value the JLR & Chery-JLR JV businesses at 2.5x EV/EBITDA, TML-CV at 13.0x EV/EBITDA, and TML-PV business at 14.8x EV/EBITDA and arrive at a target price of INR 572 per share (unchanged), implying an upside of 28.9%. Accordingly, we maintain our “BUY” rating on the shares of Tata Motors.

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