Tata Motors, a major player in the Indian automotive industry, has continued to underperform benchmarks Sensex and Nifty in 2025. On February 25, the stock touched a new 52-week low, reflecting a challenging period for the company. However, brokerage firm CLSA remains bullish on the auto stock.
### Tata Motors Share Price
Tata Motors’ stock ended at Rs 661.75 apiece on BSE, close to its new 52-week low of Rs 660.10. The company’s market cap stands at Rs 2,43,602.70 crore, with a price-to-equity ratio of 39.30x and a return on equity of approximately 20.24%.
Year-to-date (YTD), the stock has declined by 11.7%, and over the past six months, it has dropped over 39%.
### Demerger and Future Plans
Tata Motors is in the process of demerging into two separate listed entities:
1. Commercial Vehicles business and its related investments.
2. Passenger Vehicles businesses, including PV, EV, JLR, and related investments.
As part of the demerger plan, Tata Motors shareholders will receive 1 share of TMLCV with a face value of Rs 2 each for every 1 share held in the company. The demerger is expected to come into effect in October this year.
### CLSA’s Recommendation
CLSA has highlighted key investor concerns, including weak demand in key markets for JLR like the EU, China, and the UK, as well as the risk of import tariffs in the US. Despite these challenges, CLSA believes that Tata Motors’ stock has potential.
– *EBIT Margin Guidance*: CLSA notes that the management’s EBIT margin guidance of ~10% may be tough to achieve in the current demand environment. Launching EVs during this period could also add to margin risk.
– *Domestic HCVs*: The declining retail numbers in the Heavy Commercial Vehicles (HCV) segment pose a risk to the sustainability of ~11-12% standalone margin in FY26.
– *Market Share and Profitability*: Rising competitive intensity could impact the market share and profitability of Tata Motors’ PV business, including EVs.
CLSA pointed out that JLR’s current price implies an FY27CL EV/EBITDA of ~1.2x, compared to a normative multiple of 2.5x, indicating uncertainty in the business outlook. However, a partial de-rating and ~25% cut in EBITDA estimate are already built into JLR’s current price.
### Future Outlook
CLSA is building in a 5% decline in goods M&HCVs for Tata Motors in FY26, in line with the industry outlook. However, post a couple of subdued years for M&HCVs, CLSA expects a cyclical revival from FY27.
CLSA upgraded Tata Motors to HC O-PF from O-PF, with an unchanged target price of Rs 930, implying 10x/2.5x FY27CL EV/EBITDA and a DCF-based TP of India PV business.
### Key Factors to Monitor
Key factors to watch for Tata Motors include:
– Monthly retail demand and discounting for JLR in key markets.
– Tariff implementation by the US on imports from the EU.
– Market share grabs by Chinese OEMs in the EU/UK.
– Domestic M&HCV monthly retails.
– New launches in India PV portfolio.
As Tata Motors navigates these challenges and opportunities, investors will closely monitor the company’s performance and strategic initiatives.
Stay tuned for more updates on Tata Motors and the automotive industry.
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