EQUITY ANALYSIS

FAZAL UL VAHAB | TAYYEBA KHURSHID | AHAMMED RAMEEZ | JAYANTH R PAI

PGCM IBCM 2022-23

IMS PROSCHOOL KOCHI
 Tata Motors Limited

 Celebrates 75 years of past glory, since 1945

 Tata Indica, India’s first indigenously built car

 Globally present in over 125 countries

 pioneering India's Electric Vehicle transition 

 Built the world’s costliest version of their cheapest car

 CONTENTS

1. About
2. DCF Valuation
3. Key Assumptions
4. WACC
5. Explicit Forecast
6. Valuation
7. Sensitivity Analysis
8. Relative Valuation
9. Implied Share Price
10. Valuation Charts
DISCOUNTED CASH FLOW
VALUATION

Current Details
Current Market Price : 458.7
Number of outstanding Shares : 383cr
Cash at hand : 2450cr
Market Value of Equity : 175675cr
Total Debt : 14103cr
 Key Assumptions

Growth Rate (Indian Economy) : 6%

Risk Free Rate (10yr Govt. Bond Yield) : 7.2%
Market Return (20yr CAGR of Nifty returns) : 15%
Beta : 1.73
 WACC Calculation
Weight of Equity : 92.6%
Weight of Debt : 7.4%
Cost of Equity : 20.7%

Cost of Debt : 9.4%

WACC : 19.8%
 EXPLICIT FORECAST

2023 E 2024 E 2025 E 2026 E 2027 E

EBIT*(1-T) 1197 1249 1316 1400 1501

Depreciation 1377 1445 1516 1591 1672
Purchase of assets -2054 -2149 -2259 -2386 -2533
Changes in WC 8729 -6677 8985 -6376 9338
FCFF 9249 -6132 9558 -5772 9979
 NET PROFIT GROWTH

Net Profit Growth

0 -4.60%

-4.70%
-500
-4.80%
-1000 -4.90%

-1500 -5.00%

-5.10%
-2000
-5.20%

-2500 -5.30%
1 2 3 4 5

NP Net Profit Margin

 VALUATION

2028 E 2029 E 2030 E 2031 E 2032 E

FCFF 2028 6789 7239 7704 8182
Terminal Value 62677
Total Cash Flow 2028 6789 7239 7704 70859

Enterprise Value 27652

Less Debt -14103
Add Cash 2450
Equity Value 15999
 VALUATION

Less than 5% SELL Target Price 42

Between 5% & 15% HOLD Expected Return -89.9%

Greater than 15% BUY Rating SELL

 Sensitivity Analysis

Terminal Growth (%)

42 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%
15.8% 64 67 70 73 77 81 85 90 95
16.8% 56 58 60 63 65 69 72 76 80
17.8% 48 50 52 54 56 59 61 64 67
18.8% 42 43 45 47 49 50 53 55 57
WACC

19.8% 37 38 39 41 42 44 45 47 49
20.8% 32 33 34 35 36 38 39 41 42
21.8% 28 29 30 31 32 33 34 35 36
22.8% 24 25 26 27 27 28 29 30 31
23.8% 21 22 22 23 24 24 25 26 27
 Relative Valuation
Number of Enterprise
Company Name Share Price Debt Cash Equity Value
Shares Value

Ashok Leyland 138.00 293.61 26,893.34 1,463.49 40,518 65,948

Maruti Suzuki 8,670.80 30.21 624.90 3,033.20 261,945 259,537

M&M 1,204.55 124.35 83,272.91 9,622.17 149,786 223,437

Eicher Motors 3,213.05 27.35 168.28 2,335.94 87,877 85,709

 Valuation Statistics

Enterprise
Value/Revenue P/S Multiple P/B Multiple
Mar-22 Mar-23 Mar-24 Mar-22 Mar-23 Mar-24 Mar-22 Mar-23 Mar-24
Ashok Leyland 3.0 x 1.9 x 1.6 x 1.9 x 1.2 x 1.0 x 5.5 x 5.1 x 4.4 x
Maruti Suzuki 2.9 x 2.2 x 1.9 x 3.0 x 2.2 x 1.9 x 0.1 x 0.1 x 0.1 x
M&M 3.9 x 2.7 x 2.4 x 2.6 x 1.8 x 1.6 x 0.4 x 0.4 x 0.3 x
Eicher Motors 8.5 x 6.0 x 5.2 x 8.7 x 6.1 x 5.3 x 0.3 x 0.3 x 0.2 x
 Implied Share Price

Min 25th Percentile Median 75th Percentile Max

EV/Revenue (TTM) 337 10 56 196 430
EV/Revenue (Fwd-1) 218 31 40 137 322
EV/Revenue (Fwd-2) 193 26 40 128 290
P/S (TTM) 351 104 68 302 805
P/S (Fwd - 1) 238 95 77 242 591
P/S (Fwd - 2) 218 93 67 221 555
P/B (TTM) 10 22 16 179 512
P/B (Fwd - 1) 8 17 12 146 419
P/B (Fwd - 2) 9 18 13 154 441
 DCF Valuation
Target price-DCF
Relative Valuation
VALUATION RANGE : 44 TO 75

P/B (Fwd - 2)
P/B (Fwd - 1)
P/B (TTM)
P/S (Fwd - 2)
P/S (Fwd - 1)
P/S (TTM)
EV/Revenue (Fwd-2)
EV/Revenue (Fwd-1)
EV/Revenue (TTM)
- 200 400 600 800 1,000 1,200 1,400 1,600 1,800

Min 25th Percentile Median 75th Percentile Max

 Conclusion
 EPS is Declining Year over Year

 Our Valuation range is 44 - 75

 We expect 89.9% Downside from

current levels

 We recommend sell
 THANKYOU
FAZAL UL VAHAB | TAYYEBA KHURSHID | AHAMMED RAMEEZ | JAYANTH R PAI

PGCM IBCM 2022-23

IMS PROSCHOOL KOCHI