The automobile sector accounts for approximately 6 percent of India’s GDP, with exports reaching 4.5 million units in FY24, including 6,72,105 passenger vehicles and 3.45 million two-wheelers. Over the past four years, the sector has attracted $36 billion in foreign direct investment (FDI), highlighting India’s growing prominence in the global automotive industry.
Price Action
The shares of Tata Motors Ltd, with a total market capitalization of Rs 2.50 Lakh Crore on Wednesday, were trading at Rs 681.75 per share, which was 0.25 percent higher than the previous closing price of Rs 680.05.
The shares are currently trading around 12.5 percent higher than its 52-week low of Rs 606 per share. The shares of Tata Motors Ltd generated a three-year return of 56.3 percent and a stellar 865.3 percent return in the last five years.
Management Guidance
The CFO of Tata Motors recently assured analysts during an analyst meeting that Jaguar Land Rover (JLR) will meet its Q4FY25 EBITDA margin guidance of 10 percent and will be net debt-free by the end of the financial year.
He highlighted strong performance in China and the US, favorable demand in the European Union, and continued improvement in the UK market. While the passenger vehicle segment requires further progress, JLR’s premiumisation and the commercial vehicle segment in India are advancing well. The company aims to maintain market share in the small CV segment while targeting margin improvements in the domestic CV segment.
In its India PV business, the company has planned several launches across different powertrains, including the Sierra and Harrier, along with a repositioning of the Curvv and Altroz. In its India CV business, Tata Motors is working on revamping its SCV segment by addressing key challenges.
Brokerage Targets
Last week, Nomura gave Tata Motors a “buy” rating with a target price of Rs 861 per share, it estimates that volume growth will be flat, with 4 percent YoY growth and 6 percent YoY growth for the financial years 2025, 2026, and 2027, respectively.
Macquarie set a target price of Rs 826 per share with an “Outperform” rating, while CLSA has the highest target at Rs 930 per share and added the stock to its “high-conviction outperform” list.
On Monday, March 17, 2025, International Brokerage HSBC upgraded its rating to “buy” from its earlier rating of “hold”, but the brokerage cut its price target on the stock from Rs 930 per share to Rs 840 per share. The revised price target implies an upside potential of 23 percent from its current levels.
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Brokerage Rationale
HSBC highlighted that Tata Motors Ltd’s valuations appear reasonable, especially after a de-rating over the past two to three quarters. Jaguar Land Rover (JLR) is currently trading at 1.8 times the FY26 Enterprise Value-to-EBITDA (EV/EBITDA), which is at the lower end of its historical average.
HSBC also anticipates a margin recovery for Tata Motors, driven by reduced discounts and warranty costs at JLR, as well as improvements in the domestic Small Commercial Vehicles business. The firm noted that if JLR meets its guidance in the March quarter, it could trigger a re-rating, and the company’s new launches in the domestic Passenger Vehicles market should further boost its market share.
Monthly Sales
For February 2025, the Total Domestic Sales of Tata Motors Ltd fell by 9 percent YoY from 84,834 units in February 2024 to 77,232 units in February 2025. Their total Commercial vehicle sales dropped by 7 percent YoY from 35,085 units to 32,533 units, and the sales of the total Passenger vehicles segment including EV, stood at 46,811 units, which is a decline of 9 percent YoY.
Business Segments
Tata Motors’ automotive operations are diversified across commercial vehicles, passenger vehicles, luxury vehicles through Jaguar Land Rover (JLR), and financial services for vehicle financing. The Passenger Vehicles (PV) segment includes cars, utility vehicles, and vans, while the Commercial Vehicles (CV) segment focuses on trucks, buses, and other commercial vehicles. Additionally, the company offers luxury vehicles under the JLR brand and provides a wide range of financing solutions through Tata Motors Finance.
Market Share
It is the dominant player in the domestic CV segment, with a market share of around 37.7 percent in 9MFY25. On the PV front, the company has seen a significant turnaround in operations, led by new product launches, product re-engineering, and footprint expansion, leading to increased reliability and acceptance among customers. In 9MFY25, the market share for the PV segment was around 13.3 percent. TML also benefits from its early-mover advantage in the EV business, where its market share stood at 61 percent for the same period.
Financials
The company reported a slight increase of 2.7 percent YoY in Revenue from Operations from Rs 110,577 Crore in Q3FY24 to Rs 113,575 Crore in Q3FY25. Their Net Profits declined by 23 percent YoY from Rs 7,145 Crore to Rs 5,578 over the same period.
About Tata Motors Ltd
Tata Motors Ltd is a leading global automobile manufacturer, part of the Tata Group, offering a diverse portfolio of vehicles, including cars, trucks, buses, and defense vehicles. Its operations span across countries like India, the UK, South Korea, South Africa, China, Brazil, Austria, and Slovakia.
Written By Adhvaitha Nayani
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