Tata Motors' JLR Q2 Wholesales Down 10% YoY Due To Supply Constraints: Motilal Oswal

Motilal Oswal Report

Jaguar Land Rover, a wholly owned subsidiary of Tata Motors Ltd.'s margins to remain under pressure over FY24-FY26, given:

1. the rising cost pressure as it invests in demand generation;

2. normalizing mix; and

3. EV ramp-up, which is likely to be margin-dilutive.

Even in the Indian business, both commercial vehicle and passenger vehicle businesses are experiencing moderation in demand. We have factored in flat margins for the Indian business over our forecast period. 

While there is no doubt that Tata Motors delivered an extremely robust performance across its key segments in FY24, the above mentioned headwinds could hurt its performance going forward.

The stock trades at 16 times/13 times FY25E/FY26E consolidated EPS and six times/five times enterprise value/Ebitda. We reiterate Neutral with our June’26E SOTP-based target price of Rs 990.

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