Prabhudas Lilladher's research report on Tata Motors
We increase our FY24/25E EPS estimates by 10%/8%, to factor in company’s guidance and 4Q results. Tata Motors’ (TTMT) consolidated revenue (+c20% QoQ) was lower than our estimates by c2%, however beat consensus. The company saw improvement in revenue and EBITDA margins (Consolidate: +120bps QoQ) across divisions. Product mix improvement in JLR continued and a strong order book of 200k units (with 76% mix of higher ASP models) gives us confidence that JLR will be able to sustain its high ASP in the future, even as production improves. M&HCV demand outlook is strong and TTMT is confident of maintaining its lead in SUVs. We maintain our positive stance given (1) JLR’s volume ramp-up resulting in strong revenue, profitability and FCF (aided by high order book), 2) CV segment (on domestic side) benefitting from ongoing upcycle, operating leverage and tailwinds from lower commodity costs & lower discounting and (3) strong market share in PV segment (13.5% vs 8% in FY21) led by revamped portfolio, rising SUV share and rising EV penetration.
Outlook
We expect revenue/EBITDA CAGR of 12%/32% over FY24/25E. Retain ‘BUY’ with SoTP based TP of Rs 605 (Mar-25) (previous Rs. 590).
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