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Motilal Oswal Report
Given the significant challenges at Jaguarl Land Rover and the continued geopolitical uncertainty, domestic brokerage firm Motilal Oswal Financial Services has reiterated its Sell rating on Tata Motors Passenger Vehicles Ltd. with a SoTP-based target price of Rs 312 per share (based on FY28E), implying a potential downside of around 14% from current levels.
The brokerage values JLR and the India PV business at 2x and 13x EV/Ebitda, respectively.
Key concerns flagged
According to Motilal Oswal, multiple structural and cyclical challenges continue to weigh on Tata Motors' outlook:
- Tariff pressures, especially in key export markets like the US
- Weak demand in China, aggravated by luxury taxes
- Rising input costs and inflationary pressures
- Higher warranty and marketing expenses impacting margins
These factors, the brokerage said, are likely to offset the benefits of improving product mix and planned cost-saving measures in the near term.
The report also highlighted that the absence of FY28 guidance further clouds earnings visibility, making it difficult to build confidence around the sustainability of the recovery.
Valuation and view
While India's PV demand outlook remains positive, it is expected to witness margin pressure in the near term, given the material surge in input costs. Further, JLR continues to face multiple headwinds both on the demand and cost front.
While JLR has embarked on a major cost reduction initiative, it is likely to only partially offset the current headwinds for the company.
Given the significant challenges at JLR and the continued geopolitical uncertainty, Motilal Oswal has reiterated its Sell rating on Tata Motors Passenger Vehicles.
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