Motilal Oswal's research report on Tata Motors
TTMT’s India Investor Day 2023 highlighted its focus on a) customer-centric innovations in both businesses, b) profitable growth by leading from the front, and c) consistent delivery on financial targets. Here are the key takeaways from the meetings: Most of the leading indicators, such as customer surveys and transporter confidence index (except ICV and LCV), seem positive. TTMT expects a single-digit growth rate for the CV industry in FY24. It is yet to see any benefits from the implementation of the voluntary scrappage policy from Apr’23. Usually, CV demand is good in a pre-general election year due to election spending, and it moderates after the elections. The company’s focus on discount moderation is paying off, and it wants to cut discounts to below 10%. It has not increased ex-showroom prices since Sep’22; however, a reduction in discounts helped improve realizations. TTMT is driving electrification in CVs to lead the EV transition by delivering comprehensive EV solutions customized to address intended application requirements. For each of its EV products, it has an anchor customer in place. It has entered into a JV with Cummins for all future zero-emission technologies, including BEV, Hydrogen ICE and Hydrogen Fuel Cell.
Outlook
The stock trades at 19.2x/16.7x FY24E/FY25E consolidate P/E and 4.9x/4.2x EV/EBITDA. Reiterate BUY with our SOTP-based TP of INR650 (Jun’25).
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