TATA MOTORS, AT ITS 2025 INVESTOR DAY, ARTICULATED A CONFIDENT ROADMAP FOR GROWTH ACROSS CV, PV, AND EV BUSINESSES

News: Tata Motors, at its 2025 Investor Day, articulated a confident roadmap for growth across CV, PV, and EV businesses. At its India CV business, it is targeting regaining 40% market share (currently pegged at 37%) and further grow EBITDA margins from double digit to ‘teens’ by FY27, supported by recovery in SCV volumes and growth in non-vehicle business (share increasing from 17% to 20%) as well as digital innovation. At its CV business it also aims at reducing the cyclicality of margins, earnings and cash flows. Capex spends in this domain will be in the range of ~2-4% (40% allocated towards new product development and technologies including powertrain) with FCF target at ~7-9% of sales and healthy 30%+ return rations. It expects domestic CV industry to clock volume (TIV) growth of 3-5% CAGR over FY25-30 supported by steady 60%+ share of Road transport in total freight movement pan India, positive read demand outlook from all major industries namely steel, cement, mining, infrastructure etc. with partial dent coming from Dedicated freight corridor (especially North-West which will impact high tonnage tractor trailer volumes). It intends to outperform the industry and is also looking at a meaningful export play. 

View: In the PV business, it will continue onto its strategy of new nameplate launches, multi-powertrain offerings and network expansion (more importantly service network expansion amidst rising population of cars). The recent underperformance of this segment was owning to 30% YoY decline in volumes in passenger car segment (hatches) amidst the industry decline of 13% YoY. The company is positive on addressing this issue with recent refresh launch of Tiago and Altroz. It is positive on recouping loss of volumes on this front. Long term growth rate for domestic PV space is pegged at ~7%. It is looking at 7 new product launches by FY30 which includes Sierra across powertrains, Avinya and others. It will also rollout 23 facelifts and refreshes by FY30. In the EV domain it aims for sustaining 50%+ market share and is approaching the same through a comprehensive ecosystem approach which includes charging infrastructure. The PV and EV businesses aim to achieve 10% consolidated EBITDA and positive free cash flow by FY30. It has guided for ambitious ₹ 33,000-35,000 crore of capex spend in the PV+EV domain over FY26-30. We come impressed with the clarity of thought that management possesses to outgrow each of its business segments and envisaged improvement in financial matrix along with gain in market share. The proposed demerger of the PV/EV and CV businesses is expected to drive focused execution and unlock shareholder value. We remain positive on Tata Motors from medium to long term perspective. 

Impact: Positive