TATAMOTORS - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Quick Answer: Tata Motors reported FY25 consolidated revenue of ₹119,500 Cr, EBITDA ₹16,700 Cr, PAT ₹12,486 Cr, with strong free cash flows of ₹19,400 Cr. Market cap is ~₹1,39,192 Cr, P/E ~24–26, debt-to-equity moderate, and ROCE/ROE improving

Tata Motors

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Fundamental Rating: 4.0

📊 Core Financials: Tata Motors posted consolidated FY25 revenue of ₹119,500 Cr (+0.4% YoY) and EBITDA of ₹16,700 Cr (-4.1%). PAT stood at ₹12,486 Cr, slightly down from ₹12,552 Cr (-3.91%). Automotive free cash flows were strong at ₹19,400 Cr. Debt-to-equity remains moderate, ensuring balance sheet stability. ROCE and ROE are improving, supported by strong operating leverage.

💹 Valuation Indicators: Current market cap is ~₹1,39,192 Cr. P/E is ~24–26, in line with industry averages. Book value is ~₹622 ₹, implying a P/B ratio of ~2.9, which is fair. PEG ratio is not meaningful given cyclical earnings. Intrinsic value appears close to CMP, offering moderate margin of safety.

🏭 Business Model & Competitive Advantage: Tata Motors operates across passenger vehicles, commercial vehicles, and Jaguar Land Rover (JLR). Its competitive advantage lies in diversified portfolio, strong domestic CV leadership, and global luxury brand JLR. EV offerings (Nexon EV, Tiago.ev, Curvv) strengthen long-term positioning in sustainable mobility.

📈 Entry Zone Recommendation: Current price trades near neutral technical levels (DMA 50 ~₹1,817, DMA 200 ~₹1,740). RSI ~43 suggests mild weakness. Entry zone recommended between ₹1,700–1,800 for accumulation. Long-term holding is favorable given strong fundamentals, EV growth, and global diversification.

Positive

• ✅ Strong free cash flows (₹19,400 Cr) support balance sheet strength.
• ✅ Diversified portfolio across CV, PV, and JLR segments.
• ✅ EV leadership with Nexon EV, Tiago.ev, and upcoming Curvv EV.

Limitation

• ⚠️ Quarterly PAT decline (-3.91%) indicates mild earnings pressure.
• ⚠️ High cyclicality in CV and JLR segments.
• ⚠️ Valuations fair but not deeply undervalued.

Company Negative News

• 📉 JLR revenue down 1.7% in FY25, highlighting global demand pressure.
• 📉 Passenger vehicle revenue down 13.1%, showing domestic margin stress.

Company Positive News

• 📢 Commercial vehicle sales up 29% YoY in Nov 2025.
• 📢 EV portfolio expansion with Tiago.ev, Nexon.ev, and Curvv strengthens growth outlook.

Industry

• 🚗 Auto sector benefits from rising demand in CVs and EV adoption.
• 🚗 Industry P/E ~26 suggests moderate valuations, making Tata Motors fairly valued.

Conclusion

🔎 Tata Motors demonstrates strong fundamentals with diversified operations, robust cash flows, and leadership in EVs. Valuations are fair but not deeply undervalued. Best suited for long-term investors seeking exposure to autos and EV growth, with entry near ₹1,700–1,800. Allocation should be steady, supported by strong profitability momentum and industry tailwinds.

Sources

The Times of India

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Would you like me to extend this into a peer benchmarking overlay comparing Tata Motors with Mahindra & Mahindra, Maruti Suzuki, and Ashok Leyland, or a sector rotation basket scan to identify diversified opportunities in autos and EVs?