Neutral Tata Motors; target of Rs 1000: Motilal Oswal

Motilal Oswal's research report on Tata Motors

Tata Motors (TTMT) has announced the demerger of its business verticals into two separate listed companies (click here for the press release), which will house: 1) the commercial vehicle (CV) business and its related investments in one entity; and 2) the passenger vehicle (PV) business, including PVs, EVs, JLR, and related investments in another entity. While the demerger seems to be a step in the right direction, we do not foresee any need to revisit our target price, which is already based on SoTP valuation.

Outlook

Moreover, despite factoring in most of the positive triggers in our estimates, we get limited upside given the recent sharp run-up in the stock. We, hence, downgrade TTMT to Neutral (from BUY) with an unchanged TP of INR1,000 per share.