Broker’s call: Tata Motors (Buy)

Target: INR 605

CMP: INR 559.65

We attended Tata Motors India Investor Day and showed positive results on Tata Motors India Strategy. Management highlighted continued growth in the CV and PV sector, but with a moderation in the growth rate. The demand outlook for the M & HCV is strong and Tata Motors is confident in maintaining its leadership in SUVs.

We liked the strong focus on margins across divisions to grow profitably by disrupting standard industry practices in the resume segment. Electric vehicles have become a major focus for Tata Motors with a separate session being planned to highlight the increasing awareness within the company regarding climate change and the comprehensive measures the company is adopting to become net zero by 2040 in PV and 2045 in the Bio section.

We remain positive about Tata Motors given the following: JLR volume increase resulting in strong revenue and profitability and FCF (helped by high order book); The CV segment (on the domestic side) benefits from continued rotation, operating leverage and tailwinds from lower commodity costs and lower discounting; and strong market share in the PV segment (13.5 percent vs. 8 percent in FY21) led by the revamped portfolio, increasing SUV share and greater EV penetration.

We expect EBITDA/Revenue growth to be 12% / 32% during fiscal year 24/25. We have a “BUY” rating with a SoTP based TP of $605 (March 2025).