Broker’s call: Tata Motors (Reduce)

Posted on by

Target: ₹769

CMP”: ₹988.60

CV division’s RoCE rising to 36 per cent in a flat volume year is impressive. Van, pick-up vehicle, non-vehicle and digital businesses are a priority till FY30. PV division aims to raise market share by 35 per cent to 18-20 per cent by FY30F, on a car industry CAGR of 6 per cent. New models to expand its addressable market to 80 per cent.

Demerger may take a year to complete all formalities, after which we prefer the CV Filesadmin.co.

Management expects India’s passenger vehicle or PV industry to touch 6m units by FY30F, a CAGR of 6%. Expects fuel mix of 25:20:5:50 for CNG, EV, diesel and gasoline vehicles. Tata Motors plans to grow faster than the industry by improving its addressable market from 53 per cent to 80 per cent led by new name plates and powertrain options (EV and CNG).

Tata Motors has organized itself into eight verticals in the CV business to deliver superior value to its customers. Overall market shares remain steady, with trucks continuing to remain strong while witnessing green shoots in SCV, and the target is to win back market share in the small commercial vehicle or SCV segment.

Tata Motors plans to scale up its digital businesses to $1bn by FY30F – Fleet Age, Freight Tiger, E-dukan and Fleet Verse. It plans to tap the leasing option for FAME bus supplies to improve the RoCE.