Following the first-quarter earnings, brokerages have presented divergent outlooks on Tata Motors' passenger vehicle (PV) division and its luxury subsidiary, Jaguar Land Rover (JLR). While Motilal Oswal has adopted a bearish stance, Nuvama remains optimistic about the company's long-term growth prospects.
Motilal Oswal: Bearish Outlook and Price Target
Despite JLR's stronger-than-expected Q1 performance, Motilal Oswal has reiterated a 'Sell' rating for Tata Motors, setting a sum-of-the-parts (SoTP) target price of ₹310 per share based on FY28 estimates. The brokerage values JLR at 2x EV/EBITDA and the India PV business at 13x EV/EBITDA.
Motilal Oswal acknowledges a robust upcoming product cycle for Tata Motors, including the Range Rover Electric launch in September 2026, followed by the Range Rover Sport Electric, Range Rover GT, and Jaguar Type 01. However, they highlight several headwinds.
While JLR aims for double-digit revenue growth over the next five years, focusing on propulsion flexibility and strengthening its North American presence, challenges persist on both demand and cost fronts. Although JLR expects the shift to higher EV sales to be margin-neutral or accretive, and new EMA-based smaller vehicles could support profitability, the pace of execution needs to accelerate to meet FY27 guidance after a weaker Q1.
For the India PV business, Motilal Oswal notes continued market share gains but points to profitability pressure due to an adverse product mix and rising input costs. Despite raising its FY27 EPS estimate by 12% following JLR's Q1, no material changes were made to FY28 estimates, signaling caution.
Nuvama: Bullish Stance and Revised Target
In contrast, Nuvama maintains a 'Buy' rating on Tata Motors, though it has slightly lowered its SoTP-based target price to ₹450 from ₹470. This valuation is based on 11x EV/EBITDA for the India PV business, 2x for JLR, and ₹60 per share for investments. Nuvama estimates Tata Motors trades at 4.7x FY27E and 3x FY28E EV/EBITDA at current valuations.
Nuvama projects India PV revenue to grow at a 23% CAGR between FY26 and FY28, driven by new launches and healthy demand. The company plans to expand its passenger vehicle portfolio to 15 nameplates by FY30, including seven new products like the Sierra, Avinya range, two new internal combustion engine (ICE) models, and two new EVs. Two new nameplates are anticipated in FY27, with media reports suggesting the Safari EV, Avinya EV, and Scarlet ICE among them.
The brokerage expects India PV EBITDA to grow at a significantly faster 41% CAGR over FY26–28, supported by higher volumes, an improved product mix, PLI incentives, and cost savings. Nuvama also forecasts strong growth for JLR, with revenue and EBITDA expected to grow at CAGRs of 14% and 52%, respectively, over the same period.