Tata Motors share price targets post analyst meet, outlook & more

Tata Motors has set ambitious targets for expanding its market share and improving profitability in both its commercial and passenger vehicle segments by FY27. The company aims to capture a 40% market share in commercial vehicles (CVs) and deliver an Ebitda margin in the teens, according to recent reports by MOFSL and Nuvama Institutional Equities following the company's analyst meet.

MOFSL reported that Tata Motors expects the CV industry to grow at a slower compound annual growth rate (CAGR) of 3-5% over the next five years, compared to the average freight demand CAGR of 5-7%. The impact of dedicated freight corridors contributes to this outlook. Nevertheless, the company remains focused on achieving resilient margins and high returns across CV cycles.

In the passenger vehicle (PV) segment, Tata Motors targets a 16% market share by FY27, with expectations of 18-20% within the next 2-3 years. The company's strategy includes launching new products to outperform industry growth in FY26. It aims to deliver a double-digit EBITDA margin in PVs by FY27. However, execution is critical, given the weak demand environment and rising cost pressures.

Nuvama Institutional Equities highlighted that single-digit growth is likely in both domestic CV and PV segments in FY26. The company plans to launch seven new products in domestic PVs by FY30, including the Sierra, Avinya range, and new internal combustion engine (ICE) and electric vehicle (EV) models. They maintain a 'REDUCE' rating with a target price of Rs 670 due to the subdued India CV outlook.

Jaguar Land Rover (JLR), Tata Motors' luxury vehicle division, faces multiple challenges, including tariff-led uncertainty in the US, and demand weakness in Europe and China. Consequently, management has refrained from providing guidance for FY26 and beyond. MOFSL noted that these headwinds make the company's target of improving both market share and margins challenging.

Despite these ambitious plans, Tata Motors' management has decided not to change its current estimates. MOFSL reiterated a 'Neutral' stance with an FY27 SOTP-based target price of Rs 690, due to the lack of immediate triggers and persistent margin pressure expected for JLR.

As the company moves forward, execution remains a critical factor in achieving these targets, especially in a weak demand environment. The rising costs associated with warranties, emission compliance, and variable marketing expenditure add further complexity to the execution of these strategies.

Overall, while Tata Motors is focused on expanding its market presence and improving its financial metrics, the challenges in both the domestic market and international segments like JLR could hinder its progress.