Sharekhan has given Buy recommendation for Tata Motors with a target price of Rs. 610 in its research report issued on Oct 13, 2021

Sharekhan’s research report on Tata Motors

PE investors, TPG and ADQ, are investing USD 1 billion (~Rs 7,500) in the EV subsidiary of Tata Motors Limited (TAMO) for a stake of 11-15%; valuation of EV business pegged at USD6.7-9.1 billion. TAMO’s Focus on EV business and support from Government and Tata Group companies to increase faster adoption of EVs in India with dominant market share. TAMO to become earnings’ positive in FY2022E and a 64.8% y-o-y PAT growth in FY2023E, driven by a 16.7% revenue CAGR during FY2021E-FY2023E and a 120 bps improvement in EBITDA margin to 13.4% in FY23E from 12.2% in FY21.


We maintain a Buy rating on TAMO with increased our SOTP based target price to Rs 610, driven largely by value unlocking of the EV subsidiary business. The stock trades at P/E multiple of 17.5x and EV/EBITDA multiple of 5.3x its FY2023E estimates.

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