Tuesday, April 23, 2024

Tata Motors Share Market Price Target: Unveiling Value Potential in PV and CV Businesses

Strategically, Tata Motors Limited (TTMT) is set to bifurcate into passenger vehicle (PV) and commercial vehicle (CV) companies, aiming to unlock hidden value in each segment. This project, which is expected to unfold in the next 12–15 months pending the necessary approvals, promises a significant overhaul of the company’s business environment.

A recent study by Nomura India highlights the transformative potential of this disconnect. While no immediate changes are expected in valuation methodologies, the division is geared toward empowering each business unit to follow established methodologies, thus setting opportunities for creation and encouraging value.

Of particular note is the promising trajectory of Tata Motors’ PV business. With an impressive resurgence post-2020, marked by a robust market share growth of 13.5% as of 9MFY24, the PV segment’s focus on security, restructuring, and feature-rich offerings positions Nomura as a formidable player in the Indian automotive landscape. India projects Tata Motors’ ambition of achieving the status of the second largest PV player in India by FY25–26, indicating a bright outlook on the ability of the party to create value.

Also, we cannot underestimate the important role that Tata Motors plays in the development of electric vehicles (EVs) in India. Currently commanding over 70% market share in the EV segment and planning to expand its EV portfolio over 10 models by FY26, Tata Motors is poised to leverage this growing market for greater impact. The company’s vision is to get 50% of its volume from EVs by 2030, which means future price increases.

While the PV segment steals the limelight, the CV project is not without merit. With the potential benefits of e-buses and e-LCVs, as well as strong market share and profitability, the CV branch presents a strong case for future review.

Apart from the segmental lineup, Tata Motors expects to continue this confluence of synergies across PV, EV and Jaguar Land Rover (JLR) businesses especially in EV, autonomous vehicle and vehicle software domains to deliver an effective customer experience, enhance growth prospects for the sector, provide growth for shareholders and commit to delivering value

As the separation rumor unfolds, shareholders can expect Tata Motors to rethink its value proposition, with each company poised to chart its own unique approach to sustainable growth and value in the Indian dynamic car sector.


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