Buy Tata Motors; target of Rs 750: Emkay Global Financial

Emkay Global Financial' research report on Tata Motors

We attended TTMT’s analyst meet to discuss the upcoming demerger, the IVECO acquisition (refer to our note), updates on JLR after the recent cyber-attack. KTAs: 1) Demerger expected to materialize mid-Oct (subject to ROC approvals); PV business to be retained in existing entity; CV business to be listed separately (likely early-Nov). 2) The mgmt upgraded FY25-30 CV industry CAGR outlook to 6-8% (5-7% earlier), on recent GST cuts; immediate benefit of a 1-2% opexcut for fleet operators to directly aid bottom-line. The mgmt expects doubledigit CV industry growth in H2, incl SVCs (vs flat H1). Pricing discipline/margin focus to continue in CVs. 3) Saw 25-30% booking growth from 5-Sep till Navratras (industry: 20%); Q3 to see higher discounts to push volumes. After a flat H1, the mgmt expects 7-8%/sub-5% PV industry growth in H2/FY26. 4) IVECO acquisition transactionally prudent; concerns of EU exposure captured in valuations (2.3x EBITDA); IVECO to be EPS-accretive from Day-1; TTMT targets ~20% RoCE for combined entity. 5) Sales at JLR start; production slated to commence soon.

Outlook

Sep retails not affected, though some liquidity impact expected due to production halt. For JLR, US market remains resilient, China is holding up, and UK, EU are stable. We retain BUY on TTMT and TP of Rs750.