Tata Motors (TML) is an auto OEM from the house of Tata’s, operating in domestic (PV, CV) as well as global markets (Jaguar Land Rover i.e. JLR)
TML reported robust Q3FY23 results
TML’s stock price has grown 1.7% over past 5 years (~₹383 levels in Jan 2020), in line with the broader Nifty Auto index
Introducing FY25E, however continuing to value it on FY24E we arrive at ₹ 530 as the target price for TML on SOTP basis (10x, 2.5x FY24E EV/EBITDA on India, JLR; ₹158 value to Indian EV business; previous TP ₹465).
Apart from TML, in our OEM coverage we also like M&M.
|Key Financials||FY20||FY21||FY22||5 year CAGR (FY17-22)||FY23E||FY24E||FY25E||3 year CAGR (FY22-25E)|
|EBITDA Margins (%)||9.2||14.3||12.2||-||11.7||13.3||13.7||-|
Q3FY23 Earnings Conference Call highlights
Company informed about TML Smart mobility solution Ltd crossing ~|260 crore of revenue. Further company signed definitive agreement with Delhi Transport Corporation, Bengaluru Metropolitan Transport Corporation and Jammu Srinagar for deployment of 1500, 921 and 200 e-buses respectively.
Company has grown spares business by 38% YoY.
E-dukaan, online marketplace for spares grew by 164% YTD Dec’22 YoY.
Powertrain mix for PV was 66% petrol, 17% diesel, 8% EV, 9% CNG. EV market share stood at ~85% for YTDFY23 with total PV market share at 14.1% for YTDFY23.
Company informed about Tranche 2 of US$ 1 billion equity raise i.e. ₹3,750 crore to be received by January end from TPG.
Net automotive debt stood at ~|57,500 crore in YTDFY23 vs ~|59,900 crore in H1FY23.
Company expects M&HCV; ILCV; LCV to grow by 45%; 15%; 20% YoY respectively in FY23E.
Company informed about recent price cut taken in EV space (Nexon) after careful consideration & to provide better value proposition to customers, Also company has started reducing discounts in CV space from September, 2022 & has contributed to margins.
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