Target: ₹605

CMP: ₹559.65

We attended Tata Motors’ India Investor Day and came out positive on Tata Motors’ India strategy. The management highlighted continued growth in the CV and PV segment, but with moderation in the growth rate. M&HCV demand outlook is strong and Tata Motors 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 Tata Motors 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 Tata Motors given: JLR’s volume ramp-up resulting in strong revenue, profitability and FCF (aided by high order book); CV segment (on domestic side) benefiting from ongoing upcycle, operating leverage and tailwinds from lower commodity costs and lower discounting; and strong market share in PV segment (13.5 per cent vs 8 per cent in FY21) led by revamped portfolio, rising SUV share and rising EV penetration.

We expect revenue/EBITDA CAGR of 12 per cent/32 per cent over FY24/25. We have a ‘BUY’ rating with SoTP-based TP of ₹605 (March 2025).