Prabhudas Lilladher's research report on Tata Motors
We attended Tata Motors’ India Investor Day and came out positive on Tata Motors India strategy. Management highlighted continued growth in the CV and PV segment but with moderation in the growth rate. M&HCV demand outlook is strong and TTMT is confident of maintaining its lead in SUVs. We liked the strong focus on the margins across division to grow in a profitable manner by disrupting standard industry practices in the CV segment. EVs have become a big focus point for TTMT with a separate session being planned for highlighting increased awareness within the company related to climate change and holistic measures being adopted by the company to become net zero by 2040 in PV and 2045 in CV division. We remain positive on TTMT given (1) JLR’s volume ramp-up resulting in strong revenue, profitability and FCF (aided by high order book), 2) CV segment (on domestic side) benefitting from ongoing upcycle, operating leverage and tailwinds from lower commodity costs & lower discounting and (3) strong market share in PV segment (13.5% vs 8% in FY21) led by revamped portfolio, rising SUV share and rising EV penetration.
Outlook
We expect revenue/EBITDA CAGR of 12%/32% over FY24/25E. We have a ‘BUY’ rating with SoTP based TP of Rs 605 (Mar-25).
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