Tata Motors has set an ambitious goal to become the second-largest player in the passenger vehicle (PV) segment in India by FY25-26. Recently, Nomura reported that Hyundai Motor India may not see an immediate shift in valuation perspectives. This is primarily due to the strong performance of the market segments such as JALR and commercial vehicles (CV), which are thriving due to their nature.
Medium-Term Outlook
However, Nomura believes that, in the medium term, businesses are likely to pursue their respective strategies more aggressively. Nomura India, in particular, sees significant value creation potential in Tata Motors’ PV business in the coming years.
Since 2020, there have been notable improvements in Tata Motors’ PV segment, with market share rising to 13.5% by 9MFY24. This increase is indicative of the company’s growing influence in the market.
Focus on Electric Vehicles
Nomura India also highlighted Tata Motors’ efforts to increase its footprint in the electric vehicle (EV) market. The company is targeting over 70% market share in the EV sector and plans to introduce 10 EV models in its portfolio by FY26. This ambitious strategy is part of Tata Motors’ goal to derive 50% of its volume from EVs by 2030, paving the way for substantial value creation.
Improving Profit Margins
Despite the current EBITDA margin of 6.5% for Tata Motors’ PV business, there is promising improvement in the internal combustion engine (ICE) segment, which reached a margin of 9.4% in Q3FY24. This upward trend in margins indicates the company’s effective operational strategies and market positioning.
Conclusion
Tata Motors is making significant strides in the Indian automotive landscape, particularly in the PV and EV segments. With its focus on expanding market share and improving profit margins, the company is well on its way to achieving its ambitious goals. Investors and stakeholders will be watching closely as Tata Motors continues to navigate this dynamic market and work towards becoming a leading player in the industry.
