Buy Tata Motors Ltd For Target Rs. 815 By JM Financial Services
Key takeaways from Investor Day 2025
Tata Motors (TTMT) recently hosted its investor meet highlighting the future strategy for its domestic businesses. In the PV/EV business, the company plans to launch 7 new nameplates and 23 product refreshes by FY30 across alternative powertrains. Investments in the PV business (including EV) are expected to be INR 330-350bn over the next 5 years, largely towards developing new products, powertrains, advanced technology, etc. Overall, TTMT targets a 280bps market share gain in the PV segment by FY27, led by these launches. In respect of the CV business, the industry is expected to grow at a 3–5% CAGR over FY25- 30E. Further, TTMT is focusing on opportunities in CV export markets by strengthening market leadership, expanding its product portfolio and enhancing its distribution network in key markets. TTMT is targeting EBITDA margins in the teens for its CV business and 10% for its PV-EV business by FY30E. We maintain BUY with a Mar’27 SOTP of INR 815 (standalone / JLR valued at 10x / 2x EV/EBITDA). Rising global uncertainty remains a key risk.
* Aims for 18-20% market share and double-digit EBITDA margin in the PV business: In the domestic PV business, TTMT plans to launch 7 new nameplates and 23 product refreshes across ICE and EVs to holistically enhance its portfolio by FY30. In FY26, the company has a strong pipeline in the hatchback segment, including Tiago (May’25) and the all-new Altroz (Dec’25) along with multi-powertrains models like the Sierra (new nameplate) (expected in Aug’25), Harrier, and Safari. In EVs, Harrier.ev (June’25) and Sierra.ev—are expected to capture the high-growth, large SUV segment where TTMT is currently not present. With these launches, TTMT is targeting a 16% / 18-20% market share by FY27 / FY30. In the EV segment, TTMT’s focus is on driving EV penetration (20% by FY27 and 30% by FY30) through: a) expanding the EV product portfolio, b) upcoming CAFE regulations, c) facilitating charging infrastructure, d) driving price parity for EVs (with ICE), and e) expanding the EV-exclusive retail channel. Overall, the company targets ~10% EBITDA margin and positive FCF for its PV + EV business by FY30, led by strong volume growth (expects the PV industry volume CAGR of 6.9% over FY25-30E), rich mix, higher operating leverage, DMC (direct material cost) and other cost-reduction initiatives. For the PV business, the company is targeting FCF of INR10 billion in FY27, whereas the EV business currently has negative FCF, but the business is well-funded for the next 3 years. For its EV business, the company is targeting to continue generating positive EBITDA and improve it in FY26. Intense capex activity is expected in the PV business due to investment in new products, SDVs (software-driven vehicles), advanced technologies, and powertrains. Capex is expected to be close to INR 330-350bn.
* Domestic CV to grow at a moderate pace: The company expects domestic CV volumes to grow at a 3–5% CAGR and total freight traffic to grow at 5–7% CAGR during FY25-30E. Healthy fleet indicators (freight rates up 4.9% in May’25 from Jan’23), transporters’ profitability (up 14.3% in May’25 from Jan’23), and continued infrastructure focus by governments bode well for long-term industry expansion. In the HCV segment, TTMT has maintained its market share at 53.9% during FY25. TTMT expects a 5% CAGR for MHCV goods over FY25-30E. Further, the company is focusing on regaining market share in SCVs and Pickups (PU), where it had lost 300bps during FY25 (due to 50%/40% increase in SCVs/PUs cost post BSVI vis-à-vis 30% increase in 3W), through recreating the value proposition and product portfolio improvement (launching ACE Pro which is to be positioned between ACE and 3W). The bus segment is the fastest-growing in CV (23% CAGR over FY23-25). Tailwinds for bus demand include demand from STUs, increasing intercity travel, rising tourism, urbanization, and electrification. Overall, TTMT is targeting a 40% market share (up from 37.1% in FY25), EBITDA margins in teens, and healthy positive FCF (7-9% of revenue post tax) by FY27. Capex for the CV business is expected to remain steady at 2–4% of revenue.
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