Tata Motors Limited

Consumer Cyclical — Auto Manufacturers · NSE

₹420.50−₹2.30 (−0.54%)

DalalBaazaar Score

54 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Low

Driven by short-term liabilities exceed short-term assets.

In simple words: Strong business and financial position, with both sales and profits growing well. Short-term liquidity is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Tata Motors Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Tata Motors Limited engages in the design, manufacture, and sale of automotive vehicles in India, South Korea, and internationally. The company offers pick-ups, trucks, buses, small commercial vehicles, and electric vehicles.

IndustryAuto Manufacturers

SectorConsumer Cyclical

Employees20,635

Annual revenue₹83,390 Cr

How does it make money?

Turns over ₹83,390 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹11 left at the operating level before interest, tax and depreciation. Each of its 20,635 employees supports ₹4.04 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin10.6%

Net margin3.6%

Revenue / employee₹4.04 Cr

Who are its competitors?

The closest listed comparisons in its industry are MARUTI SUZUKI INDIA LTD., TATA MOTORS PASS VEH LTD, MAHINDRA & MAHINDRA LTD, BAJAJ AUTO LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

MARUTI SUZUKI INDIA LTD.P/E 25.2x · ROE 13.4%

TATA MOTORS PASS VEH LTDP/E — · ROE -3.0%

MAHINDRA & MAHINDRA LTDP/E 17.8x · ROE 19.7%

BAJAJ AUTO LIMITEDP/E 24.7x · ROE 30.3%

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 25.5%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 23.8% against a peer median of 19.7% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE25.5%

ROE23.8%

Peer median ROE19.7%

What is the outlook?

9 analysts covering the stock expect revenue to grow about 9.3% and earnings to grow about 15.3% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+9.3%

Est. earnings growth+15.3%

Analysts9

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 2 years revenue moved -81% while net margin moved -51% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-81%

Margin effect-51%

DalalBaazaar Score

54/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 56.0% a year
✗ Profit has declined at 69.3% a year

Quality vs. Valuation

Company Quality

51/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

45/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

37.1x

1.1Y Median

50.4x

13 monthly readings · mean 49.7x · range 40.6x–58.3x

Sector Median

24.7x

median of 3 sector peers

🟢Current valuation is approximately 26% below its 1.1y median of 50.4x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 50% above the peer median of 24.7x.

vs. its own history

Cheap

50.4x median over 13 months · -26%

vs. sector peers

Expensive

24.7x median of 3 peers · +50%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

37.1x

P/B

12.16x

EV/EBITDA

17.3x

PEG

—

Dividend Yield

0.95%

What's Good / What's Bad

🟢 What's Going Well4

Debt is being paid down
Total debt is down 95% over 2 years.
Return on capital is rising
ROCE has improved from 18.3% to 25.5%.
High return on capital employed
ROCE of 25.5% is the mark of a business that converts capital into profit efficiently.
Valuation below its historical average
At 37.1x the stock trades 26% below its own median of 50.4x.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 15.2% to 10.6% over 2 years.
Return on equity is falling
ROE has dropped from 37.7% to 23.8% — each rupee of shareholder capital earns less than it did.
Short-term liquidity is tight
Current ratio of 0.76 — near-term obligations exceed near-term assets.

Red Flags

3 items require attention · 3 watch

🟡Profit is decliningFinancial
Net profit is down 91% over 2 years.
🟡Margins are compressingFinancial
EBITDA margin is down 4.6 points over 2 years.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.76 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 25.5% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Deleveraging frees up earnings
Debt is down 95% over 2 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 26% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹12,733 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 15.2% to 10.6%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
A premium to the sector to defend
It trades 50% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 37.7% to 23.8%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 9%✓ 10.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✓ ₹12,733 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 0.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 23%✓ 25.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Interest cover stays above 4x✓ 6.3x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

9 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

8 good · 2 neutral · 1 weak

Market Cap

₹1.55 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

37.1x

Fair

Fairly valued against the generic band

P/B Ratio

12.16x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹11.34

Profitable

Profitable on a per-share basis

ROE

23.8%

Strong

Strong capital efficiency

ROCE

25.5%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.44x

Low

Conservative leverage

Revenue Growth (YoY)

19.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

83.4%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.95%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹12,733 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹420.5

P/E (Forward)

17.7x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

6.9%

Average

Average margins

Net Margin

4.8%

Average

Average bottom-line conversion

Current Ratio

0.76

Tight

Tight short-term liquidity

52W Range Position

56%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

427.5 / 446.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

39.5

Neutral momentum

Financial Trend (3-Year)

Metric	FY24	FY25	FY26	2Y CAGR
Revenue	₹4.31 L Cr	₹57,788 Cr	₹83,390 Cr	-56.0%
EBITDA	₹65,574 Cr	₹28,660 Cr	₹8,866 Cr	-63.2%
EBITDA Margin	15.2%	49.6%	10.6%	—
PAT (Net Profit)	₹32,045 Cr	₹3,195 Cr	₹3,030 Cr	-69.3%
EPS	₹86.94	₹8.67	₹8.23	-69.2%
ROE	37.7%	30.3%	23.8%	—
ROCE	18.3%	24.4%	25.5%	—
Total Debt	₹1.07 L Cr	₹9,925 Cr	₹5,615 Cr	-77.1%
Free Cash Flow	₹36,501 Cr	₹25,060 Cr	₹12,733 Cr	-40.9%

🔴 Revenue has shrunk at 56.0% a year over 2 years.

🔴 EBITDA has shrunk at 63.2% a year over 2 years.

🔴 EBITDA Margin has fallen from 15.2% to 10.6% over 2 years (-4.6 pts).

🔴 PAT (Net Profit) has shrunk at 69.3% a year over 2 years.

🔴 EPS has shrunk at 69.2% a year over 2 years.

🔴 ROE has fallen from 37.7% to 23.8% over 2 years (-13.9 pts).

🟢 ROCE has risen from 18.3% to 25.5% over 2 years (+7.2 pts).

🟢 Total Debt has shrunk at 77.1% a year over 2 years.

🔴 Free Cash Flow has shrunk at 40.9% a year over 2 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹52,309 Cr

Total Liabilities

₹39,575 Cr

Total Debt

₹5,615 Cr

Cash & Equivalents

₹6,899 Cr

Operating Cash Flow

₹14,981 Cr

Capex

-₹2,248 Cr

Shareholding (proxy)

Institutional Holding

25.7%

Insider Holding

45.2%

Corporate Actions

Dividend Rate

₹4

Ex-Dividend Date

12 Jun 2026

Analyst Consensus

Recommendations

17 Buy · 2 Hold · 0 Sell

Target Price (Mean)

₹526.11

+25.1% vs CMP

Target Range

₹422 – ₹700

Peer Comparison

Company	P/E	ROE
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TATA MOTORS PASS VEH LTD	—	-3.0%
MAHINDRA & MAHINDRA LTD	17.8x	19.7%
BAJAJ AUTO LIMITED	24.7x	30.3%

Recent News

1 positive2 mixed3 general

Tata Motors Limited (TMCV.BO) stock price, news, quote and history

Yahoo Finance UK, 15 Oct

Is Now The Time To Look At Buying Tata Motors Passenger Vehicles Limited (NSE:TMPV)?

Simply Wall Street, 16 Oct

How Tata Motors’ Demerger Unlocked Value for Investors

HDFC Sky, 06 Oct

India's Tata Motors PV shares fall after profit plunges, warns on margins

Reuters, 14 AugPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Iveco Group shareholders approve Tata Motors' takeover proposals

Business Standard, 16 OctM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Tata Motors shares jump 6% after 83% Q1 FY27 profit surge, JM Financial highlights margin surprise

ET Auto, 13 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟡Business QualityAdequate12.4/20

🟢Financial HealthStrong15.1/20

🔴GrowthWeak2.4/20

🟡ProfitabilityModerate8.1/15

🟡ValuationFair7.9/15

🟢RiskLow8.5/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you.

This thesis breaks if

✓EBITDA margin holds above 9%10.6%
✓Free cash flow remains positive₹12,733 Cr
✓Debt / EBITDA stays below 2x0.6x
✓ROCE stays above 23%25.5%
✓Interest cover stays above 4x6.3x