Buy Tata Motors; target of Rs 575: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss Research report on Tata Motors

Tata Motors (TTMT) has plunged by ~35% on the bourses since its March 2015 peak, a reversal marked by fears around China. We read from the 2009 crisis (far bigger in footprint and severity) to understand potential impact of China, if any. We expect TTMT to fare better, as JLR-specific issues settle down and Street takes cognizance of its strong product pipeline. A relatively better US/Europe outlook (versus 2009) provides additional comfort. We see a disconnect between investors’ extreme pessimism and our worst-case scenario (50% drop in China profits). As seen in 2009 crisis, the disconnect is more cyclical and short term, and recovery equally sharp. Maintain ‘BUY‘.

Outlook and valuations: Stress case; maintain ‘BUY’Our worst case scenario for China still puts JLR’s RoE at ~13%. At CMP, the implied value of JLR is ~1x P/BV. The 35% stock correction versus modest earnings cut indicates extreme pessimism. Maintain ‘BUY/SO’ with an SoTP target price of INR575 (JLR fetches 5.5x EV/EBIT, standalone 8x EV/EBIDTA).For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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