Tata Motors share price targets: PV or CV, which business can generate more value?

Tata Motors share price targets: PV or CV, which business can generate more value?

Tata Motors share price
Tata Motors share price

Tata Motors aims to become India’s second largest PV company by FY25-26. Nomura cited recent reports that Hyundai Motor India is exploring a possible IPO in India.

Nomura India on Tuesday said the merger of commercial vehicle (CV) and passenger vehicle (PV) businesses of Tata Motors Ltd (DTMT) will not lead to an immediate change in road valuations. Because in India CIV, JLR and PV are said to be doing well and have good performance.

However, in the medium term, Nomura believes businesses will be able to pursue their strategies more freely.

Tata Motors share price
Tata Motors share price

“Specifically, we believe Tata Motors’ PV business can generate greater value over the next few years. Its PV business has seen a significant turnaround post 2020, with market share rising to mid-single in 9MFY24 points to 13.5 per cent. We have vision, safety, attractive design, features – “It is focused on luxury vehicles.” Nomura India said, “We had earlier predicted that TTMT will be among the top 3 SUVs in India. There will be two models.”

Tata Motors aims to become India’s second largest PV company by FY25-26F, a foreign brokerage said. Hyundai Motor India is exploring a potential IPO in India at a valuation of $22-28 billion, but Hyundai said it would yield much higher profits. Now, Nomura India has set an unchanged target price on Tata Motors at Rs 1,057.

“Tata Motors is currently leading EV penetration in India with over 70 per cent market share and plans to have 10 EV models in its portfolio by 2026. It wants to achieve 50 per cent volume from EVs by 2030. If If TTMT is successful, the project will create significant momentum for the value of the company,” Nomura India said.

Tata Motors’ PV business EBITDA margin stood at 6.5 per cent in FY2024, while ICE margin increased to 9.4 per cent. Negative EV margins in the third quarter (negative 8.2 percent) dragged down overall margins.

Tata Motors share price
Tata Motors share price

“We expect EV margins to improve over time as most of the losses come from product development costs. The future CV business may see some re-rating as this will improve its market share and profitability. Success There will be no benefit from it. We don’t think there will be any at the moment. The development is e-buses and e-LCVs. The price is not fixed,” Nomura India said.

The demerger will be effected through the NCLT scheme of arrangement and all existing shareholders of Tata Motors will hold equal stake in both the listed companies.

After subsidizing the PV and EV business as early as 2022, divestment is seen as the next logical step.

Management expects synergy across PV, EV and JLR, especially in EVs, autonomous vehicles and vehicle software. It said a recognized demerger would have a number of benefits, including improved customer experience, better development opportunities for employees and better value for shareholders.

According to the company’s official filing, the NCLT plan for demerger will be put up for approval by the TTMT board of directors in the coming months and is subject to all necessary approvals from shareholders, lenders and regulatory authorities. It is expected to take 12-15 months to complete.

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