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Healthy demand for JLR, CVs; India PV growth likely to moderate in FY24 We interacted with the management of Tata Motors (TTMT) to get an update on the demand scenario, the state of the global supply chain, JLR’s path to sustainable growth, and the outlook for its India CV/PV businesses. For JLR, supplies are gradually improving and demand is healthy. As supplies improve, JLR should reach near the zero net debt level by FY25, aided by improved production, better margins and working capital release. JLR will structurally continue its journey from being a premium brand to a premium luxury brand by focusing on its brand pull strategy and redefining Jaguar with premium positioning in the era of EVs with new launches starting from CY25. While its India businesses are already on a sustainable growth path, JLR is turning the corner and would be the key driver of the stock. Further, the monetization of its stake in Tata Technologies (possible value of INR25-47/share for TTMT) could also act as a catalyst for the stock. Maintain BUY with a TP of INR540 (Mar’25E based SOTP).

*JLR – supplies improving gradually, demand robust: The supply of chips has been gradually increasing and should continue to improve in FY24 as well. The order book is strong, led by a stable demand environment and strong brand pull of the recently launched models. Defender's commercial activity has just begun, while the company is yet to exercise multiple levers for RR/RR Sports (RRS). Variable marketing expenses (VME) are expected to rise as the supply continues to improve, resulting in an increase in demand for other LR models as well.

* JLR achieves premium luxury positioning: The company has purposefully moved away from "pushing" its goods into the market and leveraged supply issues to elevate its standing from premium to luxury premium. The company has defocused on models through its brand pull strategy and is not pushing other models through discounts. The management is prioritizing revenue over volume to gauge progress; revenue is only 15% below the FY18 peak even as volumes are down 43%. It will continue to focus on profitable growth and does not just want to be a niche player.

*Jaguar brand to be revolutionized: With an emphasis on revitalizing the brand, JLR is redefining Jaguar with premium positioning in the era of electric vehicles. In CY25, it would introduce the first BEV Jaguar, which would be significantly different from the current model. It will be followed by several EV product launches.

* EVs – all key models to have BEV offerings by CY26: Unlike its competitors, JLR is beginning its BEV journey with its key RR/RRS products in CY24. By CY26, all of its important models would come with a BEV option. It has a busy timeline of BEV launches, with the RR (RR/RRS) in CY24 and Jaguar in CY25.

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