Reduce Tata Motors Ltd for Target Rs. 950 - Emkay Global Financial Services
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TTMT’s board approved the proposal to demerge the company into two separate listed entities, viz a) CV and its related investments and b) PV, including India PV, EV, JLR, and related investments. This comes across as a logical progression of separate reporting of the CV and India PV financials run by their respective CEOs (since 2021). We believe this signifies management’s confidence that the two businesses can operate independently with self-sustaining cash flows. While we do not envisage major fundamental changes (as both businesses were run independently), we upward revise our SOTP-based TP marginally to Rs950 (vs. Rs925 earlier) as we factor in 10% premium multiple to TTMT’s CV business (vs AL IN) for potential pure-play optionality on CVs with higher scale. Downgrade to REDUCE as recent run-up leaves limited upside.
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