Add Tata Motors Passenger Vehicles Ltd for the Target 390 by Emkay Global Financial Services Ltd
We attended TMPV’s India Analyst Meet (link). KTAs: 1) TMPV guided to 15% India PV volume CAGR over FY26-31 (vs 6-7% for the industry, akin to GDP growth); it targets 20% FY31 domestic PV market share (FY26: 13.5%) via strategic product actions (6 new nameplates including 3 EVs in fast-growing segments and to address white spaces, >20 facelifts/refreshes), which would target 80% of TAM (at 65% now). 2) This would be aided by capacity expansion (1.3mnpa by FY29 vs 900kpa now; implies 13% FY26-29 capacity CAGR) and 2x/3x rise in the sales/service footprint. 3) Per TMPV, >80% of the FY26-31 industry growth and a significant part of TMPV’s growth would be driven by EVs/CNG. 3) TMPV retained 10% FY27 PV industry growth guidance despite a higher H2FY26 base, with TMPV outpacing. 4) On costs, TMPV aims for 5-6% reduction in ICE PVs over the next 2Y via structural levers and an incremental 25-35% cost reduction in EVs across key components to offset the impact from PLI expiry beyond FY28. 5) TMPV guides to 25%/19% FY26-29/FY26-31 India PV revenue CAGR with 8%/10% EBITDAM by FY29/FY31 (FY26: 5% ex-PLI; includes mid-single-digit FY29 EBITDAM for EVs ex PLI) and 4/5% EBITM (FY26:1.4%) on step-up in capex for capacity expansion; 3Y/5Y consolidated revenue guidance stands at 14%/12% (implies 12%/11% CAGR for JLR), with 7%/10% FY29/31 EBITM (FY26: 5.6%). Factoring in a robust India PV outlook, partly offset by the somber JLR guidance (JLR guidance weak; domestic PVs to cushion the blow), we retain ADD and TP of Rs390 (of which JLR forms 19%).
Guides to FY26-31 India PV volume CAGR of 15% vs 6-7% for the industry
TMPV guided to 15% India PV volume CAGR over FY26-31 (vs 6-7% for the industry, akin to GDP growth) and targets 20% FY31 domestic PV market share (FY26: 13.5%) via strategic product actions (6 new nameplates, incl 3 EVs in fast-growing segments and to address white spaces, >20 facelifts/refreshes). This would be aided by capacity expansion (1.3mnpa by FY29 vs 900kpa now; implies 13% FY26-29 CAGR) and 2x/3x rise in sales/service network. Per TMPV, >80% of the FY26-31 industry growth and a significant portion of TMPV’s growth would be led by EVs/CNG. TMPV retained 10% FY27 PV industry growth guidance despite a higher H2FY26 base, with TMPV outpacing.
Multiple calibrated initiatives underway to reduce costs and improve margins
TMPV aims for a 5-6% reduction in ICE PVs over the next 2Y via structural levers (architecture lightweighting, deeper localization, powertrain optimization, design and technology features) and incremental 25-35% cost reduction in EV components (battery packs, electric drive systems, power electronics, other HV aggregates) vs a ~2-2.5% pa cost reduction (ICE+EV) achieved over FY23-26 to offset the PLI expiry impact (from FY29 onward). TMPV would increase supply partner concentration; top-20 suppliers to account for 65% of the average purchase value by FY31 vs 50% in FY26
3Y/5Y guidance – Consol revenue CAGR: 14/12%; FY29/31 EBITM: 7/10%
TMPV guides to 25/19% FY26-29/FY26-31 India PV revenue CAGR with 8/10% EBITDAM by FY29/FY31 (FY26: 5% ex-PLI; includes mid-single digit FY29 EBITDAM for EVs ex PLI) and 4/5% EBITM (FY26:1.4%) owing to a step-up in capex for capacity expansion during the initial years (on average, 7% of revenue over FY27-31 vs 7% in FY26). India PV PBT to expand 3x/5x by FY29/31 vs FY26. The 3Y/5Y consolidated revenue CAGR guidance stands at 14/12% (implies 12/11% for JLR) with 7/10% FY29/31 EBITM (FY26: 5.6%) with a cumulative FY27-31 FCF generation of >Rs100bn.
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