Tata Motors' India operations, once a drag, are now at 50% of FY26 target price: Jefferies

Tata Motors' India business has been a major drag over the past decade, but now accounts for 50% of Jefferies' target price for fiscal 2026, analysts at the brokerage said in a latest report.

The news came after the company made a presentation at its India Investor Day, where it shared its plans to grow its market share in passenger vehicles (PV) and increase non-vehicle revenues in commercial vehicles (CV).

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Jefferies' target price is Rs 1,250 crore on FY26 EV/EBITDA estimates, or 28% higher than the current market price of Rs 989 crore. Of this, Rs 263 crore can come from the Indian commercial vehicles and Rs 370 crore from the Indian solar (including electric vehicles) sector. The rest comes from the value of Jaguar Land Rover (Rs 570 crore) and Tata Technologies (Rs 46 crore).

The brokerage has valued the company's India CV business at 10x FY26 forecast EV/EBITDA, India PV at 18x ​​FY26 forecast EV/EBITDA, Jamaica LR at 3.8x FY26 forecast EV/EBITDA, India EV business at INR 70 per share (0.5x the share sale transaction price to TPG), and Tata Technologies shares at INR 46 per share (a 25% discount to market capitalization).

Higher Magnification

Analysts noted that although the company's India business accounts for just 25% of its EBITDA, the unit commands a “significantly” higher multiple.

According to Jefferies estimates, the company's shares are trading at a FY25 EV/EBITDA multiple of 5.2x, higher than its historical average multiple, which the analysts believe is reasonable “given the improving PV franchise in India, JLR's favorable business cycle and debt reduction.”

The brokerage noted that in the PV segment, Tata intends to expand its market share from 14% in FY24 to 16% in FY27 and 18-20% in FY30. In the CV segment, it intends to gradually increase market share and achieve double-digit EBITDA margins.

To expand its PV business, the company plans to increase its market share in the industry's total sales volume from the current 53% to 80% with new products. In addition, the company plans to launch a new mid-size SUV, the Curvv, and an electric SUV, the Harrier, in FY25, and a mid-size SUV, the Sierra, and an EV, the Avinya, in FY26.

“Tata also intends to enhance PV profitability through economies of scale, improved mix, and optimised costs and capex,” the report said.

The company's key focus areas for the CV business include “strengthening product portfolio, investments in alternative fuel technologies, increasing share of non-vehicle revenue from low to mid teens in FY24 to 20% in the medium term to reduce business volatility, and rolling out digital business.”