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.
The shares of this Tata group stock rose by 3.5 percent on Wednesday following positive comments from the CFO during an analyst meeting regarding the outlook for the passenger and commercial vehicle segments.
Price Action
The shares of Tata Motors Ltd, with a total market capitalization of Rs 2.41 Lakh Crore on Thursday, closed at Rs 654.7 per share, which was 2.04 percent lower than the previous closing price of Rs 668.3.
The shares are currently trading around 8 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 percent and a stellar 699 percent return in the last five years.
Management Guidance
The CFO of Tata Motors reassured analysts during the meeting that the Jaguar Land Rover (JLR) will meet its Q4FY25 EBITDA margin guidance of 10 percent. He added that it will also turn net debt-free by the end of the financial year. He also stated that Tata Motors is outperforming in China through JLR, and also the US markets continue to do well.
Demand in the European Union has been more favorable than anticipated, and the UK market continues to show improvement. While the passenger vehicle segment still needs improvement, the premiumisation of JLR and the commercial vehicle segment in India is progressing well. The company plans to focus on maintaining its market share in the small CV segment while also targeting margin improvements in the domestic CV segment.
Brokerage Targets
The brokerage firm Nomura has given a “buy” rating on Tata Motors with a Target price of Rs 861 per share, which implies a potential upside of 31 percent from current levels.
Nomura estimates that volume growth will be flat, 4 percent YoY growth and 6 percent YoY growth for the financial years 2025, 2026, and 2027 respectively. Macquarie has an “Outperform” rating on the stock and sets a target price of Rs 826 per share, indicating an upside potential of 26 percent.
CLSA has the highest target price at Rs 930 per share, with an upside potential of 42 percent, and has added Tata Motors to a “high-conviction outperform” list.
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.
Business Segments
Tata Motors’ automotive operations are diversified across commercial vehicles, passenger vehicles, luxury vehicles through JLR, and financial services to support vehicle purchases.
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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