Prabhudas Lilladher's research report on Tata Motors
We increase our FY24/25E EBITDA estimates by 13%/9%, to factor in company’s guidance and 1Q results. Tata Motors’ (TTMT) consolidated revenue was higher than our and consensus estimates (+c30% YoY). Moreover, solid performance of JLR and India CV business boosted margin beat. JLR’s volume improvement along with better mix will likely continue and may result in guidance upgrade in coming quarters. Benefits from better product mix should continue helped by a strong order book of 185k units (with 76% mix of higher ASP models) and help post strong ASP and margins. Also, lower discounts at CV should help margins and TTMT is confident of maintaining its lead in SUVs. Overall, we maintain our positive stance on TTMT given (1) JLR’s volume ramp-up resulting in strong revenue, profitability and FCF, 2) CV segment (on domestic side) benefitting from ongoing upcycle, operating leverage and tailwinds from low commodity costs & low discounting and (3) sustained 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 17%/44% over FY24/25E. Retain ‘BUY’ with SoTP based TP of Rs 760 (earlier Rs 675).
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