Broker's call: Tata Motors (Buy)

| Updated on February 23, 2021 Published on February 24, 2021

Emkay Global

Tata Motors (Buy)

Target: ₹355

CMP: ₹324.10

We attended Tata Motor's (TTMT) India business analyst meet. Key takeaways:

Domestic CV industry volumes are expected to turn around with 36-38 per cent growth in FY22 on better macros, government thrust on infra spending, pick-up in replacement demand and possible announcement of the scrapage policy with good incentives. Tata Motors is working toward strengthening its position, driven by product launches, network expansion and focused market activities. Our FY22E domestic CV volume growth estimate for TTMT stands at 36 per cent. TTMT’s PV market share increased to 7.8 per cent in 9M-FY21 from a low of 4.8 per cent in FY20. Management expects the share to increase to double-digits, driven by new products, network expansion and focused marketing activities. Recently, the Safari mid-size SUV has been launched, and another product Hornbill micro SUV is expected to be launched in FY22. We estimate 35 per cent growth in TTMT’s domestic PV volumes in FY22.

We rate TTMT as a high-conviction Buy with a target price of ₹355, based on an EV/EBITDA of 2x/11x on JLR/standalone estimates on FY23E and the value of investments at ₹55/share. We remain positive on expectations of sales cycle recovery in JLR/India divisions, strong profitability growth on better scale/cost savings and de-leveraging efforts through FCFs/divestments.

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Published on February 24, 2021
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