Tata Motors share analysis

Stock overview

Ticker	TATAMOTORS
Sector	Automotive
Market Cap	₹ 2,35,000 Cr
CMP (Current Market Price)	₹ 706.75
52-Week High/Low	₹ 1179/ ₹ 683
P/E Ratio	14.5x
EV/EBITDA	8.2x
Beta	1.35 (High volatility stock)

About Tata Motors

Tata Motors, a key player in India’s automotive sector, is known for its strong presence in commercial vehicles, passenger cars, and electric mobility. With its subsidiary Jaguar Land Rover (JLR), the company also competes in the global luxury car market. Tata Motors continues to innovate, driving India’s transition to EVs while maintaining leadership in conventional segments.

Key drivers of growth:

1. Market leadership & diverse portfolio:

• Tata Motors is a leader in commercial vehicles and a growing force in the passenger vehicle and EV segments.
• The company’s Jaguar Land Rover (JLR) subsidiary continues to be a key revenue driver.
• Strong brand positioning in electric vehicles (EVs) with Tata Nexon EV leading the domestic market.

2. Improving financials with a cautionary note:

• Tata Motors has been improving its balance sheet with debt reduction initiatives.
• The company faces margin pressures, especially in JLR due to global demand fluctuations.
• Domestic passenger vehicle (PV) sales remain robust, but competition is intensifying.

3. Industry & government tailwinds:

• The Union Budget 2025 has proposed incentives for EVs and manufacturing, benefiting Tata Motors.
• The push for infrastructure development and smart mobility solutions supports the company’s growth in commercial vehicles.
• FAME III incentives and battery subsidies will likely accelerate EV adoption in India.

Recent financial performance (Q3 FY25)

Metric	Q3 FY 25	Q3 FY 24	YoY Growth
Revenue	₹ 1,13,575 cr	₹ 1,10,600 cr	+2.7%
EBITDA Margin	13.7%	14.3%	-60 bps
Net Profit	₹ 5,451 cr	₹ 6,950 cr	-22%
JLR Revenue	₹ 68,600 cr	₹ 67,200 cr	+1.9%
Passenger Vehicle Sales	1,35,000 units	1,25,000 units	+8%

Highlights:

• Revenue saw a modest 2.7% YoY growth, supported by stable demand in domestic PV and CV segments.
• EBITDA margins declined slightly, impacted by cost pressures and a slowdown in JLR’s profitability.
• Net profit dropped 22% YoY, largely due to lower JLR margins and higher input costs.
• Commercial vehicle sales were boosted by strong demand from fleet operators and infrastructure projects.

Valuation insights

When we are valuing Tata Motors, we’re asking two questions:

• Is it cheap or expensive compared to how it’s been in the past—or to other companies?
• How much money could it make in the future, and what does that mean for its stock price now?

From a relative valuation standpoint:

• P/E Ratio: 14.5x Compared to the industry average of 18x, Tata Motors is a bit cheaper than peers.
• EV/EBITDA: At 8.2x, Tata Motors is on par with big names like Mahindra & Mahindra (M&M) and Ashok Leyland, indicating it’s competitively valued in terms of operational performance.

As per Discounted Cash Flow analysis:

It estimates the intrinsic value of Tata Motors based on expected future cash flows:

• Intrinsic Value Estimate: ₹750 per share
• Upside Potential: 6%
• Assumptions:
  • Revenue CAGR of 10% (FY25-FY30)
  • EBITDA Margin expansion to 15% by FY30
  • WACC: 11.2%
    • Cost of Equity: 12.5% (Risk-Free Rate: 7%, ERP: 5.5%, Beta: 1.35)
    • Cost of Debt: 7.8% (Post-tax)

Key risks to watch

1. JLR Performance: Slowing demand in China and Europe remains a concern.
2. Competition in EVs: Tata Motors leads today, but global and domestic players are increasing investments.
3. Commodity Prices: Rising input costs could impact margins if not passed on to consumers.

Competitor analysis for Tata Motors

Key financial metrics (FY 24 snapshot)

Company	Market Cap (₹ cr)	P/E Ratio	EBITDA Margin	YoY Growth
Tata Motors	2,35,,000	14.5	13.7% 👍	2.7% 👎
M&M	2,80,000	19.2	15.1% 👍	8.4% 👍
Maruti Suzuki	3,00,000	26.5	12.8% 👎	10.5% 👍
Ashok Leyland	95,000	17.8	10.3% 👎	5.2% 👎

*Observations:

• Tata Motors trades at a discount to peers, making it an attractive value play.
• JLR’s performance remains a key differentiator, with any recovery likely boosting stock price.
• EV and CV segments provide growth opportunities but require sustained investments.

Technical outlook on Tata Motors share

• Resistance Level: ₹720 (52-week high)
• Support Level: ₹670 (Recent swing low)
• Trading Volume: Increasing, suggesting strong investor interest.
• RSI (Relative Strength Index): 58 (Neutral)

Tata Motors stock recommendation
Current Stance: Buy with a 12-month target of ₹750.
Rationale:
Strong domestic CV and PV growth.
EV leadership with long-term expansion plans.
Potential JLR recovery could add further upside.
Risk-Reward profile: Moderate risk with decent growth potential.

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Conclusion

Tata Motors remains a key player in India’s auto sector, balancing growth opportunities in EVs and commercial vehicles with challenges in JLR and cost pressures. While the stock is fairly valued, investors with a medium-to-long-term horizon can consider accumulating on dips, particularly below ₹700.