Buy Tata Motors; target of Rs 600: ICICIdirect

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26 Aug, 2025 12:21

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Tata Motors’ (TML) quarterly performance was a mixed bag with JLR margins surprising positively while the standalone India business continuing to disappoint

JLR’s margins at 19.4% came in higher than estimates owing to superior product, market mix as well as some favourable FX impact

Higher-than-expected tax rate in the domestic business and non-incidence of UK export incentives led to the miss on the bottomline front, which came at Rs 3300 crore (vs. estimate of Rs 4100 crore)

"We remain positive on sustained earnings growth for the JLR business as the product pipeline grows & market share increases across geographies. Domestic business is a drag on profitability but is likely to revive with an economic recovery. We value the stock on an SOTP basis, with JLR at 3.6x EV/EBIDTA basis (~10% premium to global peers) contributing ~Rs 561/share while domestic business contributes Rs 18/share. Inclusive of other subsidiaries, our target price moves up to Rs 600. However, with higher valuation upside in preference shares, we would recommend our portfolio investors add Tata Motors DVR on dips with a TP of Rs 420", says ICICIdirect.com research report.

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