Buy Tata Motors; target of Rs 750: Emkay Global Financial

June 18, 2025 | Mumbai — Emkay Global Financial Services has reiterated a “Buy” rating on Tata Motors Ltd., setting a price target of ₹750, citing strong performance across business verticals, an improving macroeconomic environment, and promising developments at Jaguar Land Rover (JLR). The brokerage firm remains confident in the automaker’s long-term growth trajectory, driven by cost optimization strategies, electric vehicle (EV) expansion, and sustained demand in both domestic and international markets.

Robust Q4FY25 Performance Bolsters Sentiment

Tata Motors recently reported its Q4FY25 earnings, which surpassed analyst estimates. Consolidated revenue for the quarter stood at ₹1.25 lakh crore, marking a 14% year-on-year increase. Net profit surged to ₹8,250 crore, driven primarily by improved operational efficiencies and a strong showing from JLR, which contributed over 60% of the quarterly profits.

Emkay analysts noted, “Tata Motors’ strong execution across verticals, particularly the turnaround in JLR profitability and increased EV adoption, is aiding margin expansion and cash flow generation. The company’s deleveraging efforts are also bearing fruit.”

JLR’s Resurgence a Key Growth Lever

One of the critical drivers behind Emkay’s optimistic outlook is the recovery in Jaguar Land Rover’s performance. JLR reported its highest quarterly EBITDA margin in nearly five years, aided by robust demand for its premium SUVs and a favorable product mix.

The brokerage highlighted that JLR’s new electric Range Rover lineup and Defender variants are witnessing encouraging response in Europe and North America. Production constraints have eased, and the semiconductor supply situation has improved considerably.

"JLR’s operational revival is not just cyclical—it reflects structural improvements in product planning, inventory management, and customer engagement," said Emkay's automotive analyst, Rahul Jain. “The order book remains strong, and the company is well-positioned for long-term sustainability."

Domestic CV & PV Businesses Continue to Perform

On the domestic front, Tata Motors’ commercial vehicle (CV) segment has witnessed a resurgence, supported by increased infrastructure spending, rural demand, and government-led fleet modernization initiatives. The passenger vehicle (PV) segment also reported strong double-digit growth, driven by demand for the Nexon and Punch models—especially their electric variants.

Tata Motors retained its leadership in the EV space in India, with EV sales growing 65% year-on-year. Emkay sees this as a strategic advantage in the evolving automotive landscape.

"Tata Motors has effectively captured the first-mover advantage in India's EV market. With increased localization and better economies of scale, we expect margin improvement in this segment over the next 12-18 months," the Emkay report stated.

Balance Sheet Strengthening and Debt Reduction

A key focus for Tata Motors over the last few years has been balance sheet repair. The company has brought down its net automotive debt to ₹20,000 crore from over ₹50,000 crore three years ago. With strong operating cash flows and cost rationalization, further deleveraging is on the cards.

Emkay believes this financial discipline will translate to higher investor confidence and better shareholder returns.

"With a lower debt burden and steady free cash flows, Tata Motors is set to unlock greater shareholder value in the medium term," Jain added.

Stock Performance and Valuation

Tata Motors’ stock has delivered over 60% returns in the past year, outperforming the Nifty Auto index. Despite the rally, Emkay maintains that there is further upside potential. The firm’s ₹750 target implies a 15% upside from current levels of ₹652 (as of June 18).

The valuation remains reasonable at 15x FY26E consolidated EPS, factoring in continued improvement in margins and robust volume growth.

Investor Outlook

With a strong domestic outlook, improving global demand, and a clear roadmap for EV leadership, Tata Motors presents a compelling investment case, according to Emkay Global. Risks include currency volatility, raw material cost pressures, and competitive intensity in both domestic and international markets.

Nonetheless, analysts believe these are manageable risks given Tata Motors’ diversified product portfolio and operational momentum.

"Tata Motors is well-poised to benefit from macro and industry tailwinds. We recommend accumulating on dips with a long-term horizon," concluded Emkay’s note.

In light of its turnaround story, robust financial metrics, and forward-looking strategy, Tata Motors remains one of the top picks in the auto sector. Emkay Global’s bullish stance with a target of ₹750 underscores the brokerage's confidence in the company's ability to sustain its growth trajectory and deliver value to investors.