BNP Paribas gives Outperform call on Tata Motors; target price Rs 830

BNP Paribas Securities has outperform call on Tata Motors Ltd. with a target price of Rs 830.0. The current market price of Tata Motors Ltd. is Rs 674.4. Tata Motors, incorporated in 1945, is a Large Cap company with a market cap of Rs 2,46,742.40 crore, operating in the Auto sector. Tata Motors’ key products/revenue segments include Motor Vehicles, Spare Parts & Others, Miscellaneous Goods, Sale of services and Other Operating Revenue for the year ending 31-Mar-2024.

For the quarter ended 31-03-2025, the company has reported a Consolidated Total Income of Rs 121,012.00 Crore, up 4.89 % from last quarter Total Income of Rs 115,365.00 Crore and down .36 % from last year same quarter Total Income of Rs 121,446.15 Crore. Company has reported net profit after tax of Rs 8,442.00 Crore in latest quarter.

The company’s top management includes Mr.N Chandrasekaran, Mr.Girish Wagh, Mr.Al-Noor Ramji, Mr.Bharat Puri, Ms.Hanne Sorensen, Mr.Kosaraju V Chowdary, Mr.Om Prakash Bhatt, Mrs.Usha Sangwan, Ms.Vedika Bhandarkar, Mr.P B Balaji, Mr.Maloy Kumar Gupta. Company has BSR & Co. LLP as its auditors. As on 31-03-2025, the company has a total of 368.13 Crore shares outstanding.

Investment Rationale

Tata Motors has a diverse set of businesses that are at various stages of capex and have different accounting policies than peers. Hence, BNP Paribas thinks a blended valuation method taking the average of EV/sales, EV/EBITDA, EV/EBIT and P/E valuations normalises the impacts of these idiosyncrasies. Tata Motors’ earnings are split into JLR, China JV, CV, PV, and India EV businesses. The brokerage’s target valuation multiples for JLR are set by benchmarking to valuation multiples of BMW and Mercedes Benz. For the China JV, they use the valuation multiples of Brilliance China Automotive as the benchmark.

BNP Paribas’ target multiples for CV are similar to those of AL and for PV, it is at a 50% discount to BNP Paribas target multiple for MSIL, as Tata Motors’ PV business margins reach the industry average. The brokerage values Tata Motors India EV business at the average of the valuation range of the last funding round, taken with a 60% discount to factor in the correction in global EV peers’ valuation since then, weak sales and increasing competition. The company also has various subsidiaries and investments, which they value at a 30% holding company discount to the latest market price, where available, or at multiples similar to those of listed peers.