TATAMOTORS - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.2

📊 Core Financials Overview

Profitability

ROE: 17.9% and ROCE: 20.3% are strong, reflecting efficient capital deployment and operational performance.

EPS of ₹23.4 and PAT of ₹5,358 Cr (up from ₹1,576 Cr) show robust earnings momentum, with a 142% QoQ profit surge.

Operating margins have improved significantly, driven by cost optimization and premium product mix.

Balance Sheet Health

Debt-to-equity ratio: 0.27 — moderate and well-managed for a capital-intensive auto business.

Book Value of ₹90.8 vs Current Price ₹711 → P/B ratio ~7.83, indicating premium pricing.

Dividend Yield of 0.84% adds modest income appeal.

Cash Flow & Stability

PEG ratio of 0.38 suggests undervaluation relative to earnings growth.

RSI at 57.9 and MACD positive indicate neutral-to-bullish momentum, supported by strong volume.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 29.6 Undervalued vs industry PE of 41.2

P/B Ratio ~7.83 Premium pricing

PEG Ratio 0.38 Attractive valuation

Intrinsic Value ~₹1,081.42 Estimated ~52% above current price

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Tata Motors is undervalued by ~34% based on blended DCF and relative valuation models

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🚗 Business Model & Competitive Edge

Sector: Tata Motors Ltd is a diversified automotive manufacturer with operations in passenger vehicles, commercial vehicles, and luxury cars (via Jaguar Land Rover).

Strengths

Strong EV pipeline and leadership in India’s electric passenger vehicle segment

Turnaround in JLR performance with improved margins and reduced chip shortages

Global footprint with manufacturing and R&D centers across UK, India, and Europe

Challenges

FII holding declined (−0.67%), possibly due to global macro concerns

High capex requirements and cyclical demand patterns

According to AlphaSpread, Tata Motors has a profitability score of 57/100 and solvency score of 50/100, indicating solid but improvable fundamentals.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹660–₹690

Near 50 DMA (₹690) and below intrinsic value

RSI suggests waiting for a mild pullback before entry

🧭 Long-Term Holding Guidance

Hold if Already Invested: Strong fundamentals and EV leadership support long-term compounding.

Accumulate on Dips: Especially near ₹660 for better margin of safety.

Watchlist Triggers

EPS consistency and JLR margin expansion

EV sales growth and new launches

Institutional accumulation and macro tailwinds

Tata Motors is a compelling auto play with global reach and a strong EV roadmap. For deeper insights, check out TopStockResearch’s fundamental dashboard or MarketScreener’s analyst ratings.

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www.alphaspread.com

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