Buy Tata Motors;target of Rs 430: ICICIDirect

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26 Aug, 2025 12:21

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ICICIDirect's research report on Tata MotorsTata Motors’ (TML) Q3FY16 results were above our estimates. Consolidated revenues were at | 72,256 crore (up 3.3% YoY, 17.8% QoQ), above our estimate of | 70,969 crore. Net revenue of JLR was at £5781 million (down 1.7% YoY, up 21.7% QoQ) vs. our estimate of £5792 million on account of lower than estimated ASP. (JLR wholesale: 150,461 units vs. our estimate 133,568 units) Consolidated EBITDA margins were at 14.2% (down 123 bps YoY, up 279 bps QoQ) vs. our estimate of 13.3%. Reported EBITDA margins of JLR were at 14.4% (down 422 bps YoY, up 155 bps QoQ). JLR’s margins were higher sequentially on account of operating leverage benefit while on a YoY basis it was down on account of poor geography mix & non occurrence of China tax rebate which happened in Q3FY15. The standalone business reported a margin of 5.7% (up 423 bps YoY) vs. our estimate of 6%. Standalone margins grew due to MHCV growth of 17% YoY and ongoing cost reduction & other margin improvement initiatives The company reported a profit of | 3507.5 crore (down 2% YoY) vs. our estimate of | 2045 crore. During the quarter, there was an exceptional income of £30 million, which was due to the initial insurance recovery. This partially reverses the exceptional charge recognised in Q2FY16 for the Tianjin Port explosion in China. While JLR reported a net income of £440 million, standalone loss came in at | 200.9 crore against our estimated loss of | 249.6 crore We remain positive on sustained earnings growth for the JLR business as the product pipeline grows and market share increases across geographies. We value the stock on an SOTP basis, with JLR at 3.5x EV/EBIDTA basis contributing ~| 341/share while the domestic business contributes | 47/share. Inclusive of other subsidiaries and China JV, we arrive at a target price of | 430. 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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