Buy Tata Motors; target of Rs 378: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Tata Motors has recommended buy rating on the stock with a target price of Rs 378 in its research report dated June 06, 2018

Prabhudas Lilladher's research report on Tata Motors

Tata Motors held its Investor day where the management discussed in detail about its medium-to-long term strategy (Turnaround 2.0) for the domestic business. With focus on topline growth, customer centricity, process improvement, agile cost management and a lean and accountable organization, the management reiterated their key objectives: 1) Regaining market share in both commercial vehicles and passenger vehicles (up 70bps in CVs and up 50bps in PV for FY18) 2) EBIT margin target of 3-5% between FY19-21 and 5-7% in the long run (FY18 EBIT margins at 0.8%) .

Outlook

With JLR's full product range available in EV/Hybrid variants from 2020 gives us further confidence. Given the attractive valuations and buoyant management guidance, we maintain "BUY" with a target price of Rs378, where we value JLR at 2.75x Mar'20E EV/EBITDA and Standalone entity at 10x Mar'20 EPS.

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