Reduce Tata Motors; target of Rs 457: HDFC Securities

HDFC Securities recommended reduce rating on Tata Motors with a target price of Rs 457 in its research report dated May 12, 2023.

Broker Research

May 16, 2023 / 13:40 IST

reduce

26 Aug, 2025 12:21

Volume

Todays L/H

HDFC Securities' research report on Tata Motors

On a consolidated basis, Q4 PAT at INR 53bn beat estimates, largely on account of higher capitalization at JLR and tax write-back of INR 16bn at the standalone entity. Despite management’s efforts, JLR’s net debt stands reduced by just GBP 200mn in FY23 vs FY22. Going forward, JLR has guided for FCF of >GBP 2bn and a reduction in net debt to GBP1bn in FY24. It is important to highlight that JLR had given a similar 5% margin guidance in FY23, but achieved just under 50% of that. More surprisingly, JLR has refrained from giving any guidance for FY25. Given the geopolitical headwinds and resultant concerns around demand slowdown in its key regions, the current guidance appears highly optimistic to us. Management is also cognizant of demand concerns which can be highlighted by the fact that they expect: (1) demand in H1 to be weak and (2) order book to decline at around 5k per month for H1. In India business, FCF sustenance looks difficult, given: 1) TTMT has lost substantial market share in CVs in FY23 and is likely to focus on recovering lost share soon; (2) demand macro is subdued in PVs and the best model cycle for TTMT is behind; (3) rise in capex.

Outlook

Maintain REDUCE, with a revised TP of INR457/sh (from INR 415) as we roll forward to FY25 EPS.

For all recommendations report, click here