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Morgan Stanley resumes coverage on Tata Motors stock with Equalweight rating

Published 27/10/2025, 13:26
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Investing.com - Morgan Stanley has resumed coverage on Tata Motors Passenger Vehicles (TTMT:IN) with an Equalweight rating and a price target of INR425.00.

The investment firm values the Indian passenger vehicle business at Rs165 per share in its base case, identifying volume recovery as a key earnings driver. Morgan Stanley expects India business volume to turn up in the second half of fiscal 2026, driven by GST-led car demand recovery and new models including Harrier EV, Punch upgrade, and new Sierra in the fourth quarter of fiscal 2026.

The firm projects that volume rebound, potential price hikes in January 2026, and PLI (Production-Linked Incentive) gains should lift margins from 3.9% in the first quarter of fiscal 2026 to 6.7% in the fourth quarter of fiscal 2026.

Morgan Stanley’s base case business value of Rs165 per share is based on 7% fiscal 2025-2028 estimated volume CAGR, 7.3% fiscal 2028 estimated EBITDA margin, and 11.4x September 2027 estimated EV/EBITDA, representing a 30% discount to the average of MSIL and HMI.

In its bull case scenario, Morgan Stanley assumes 8% fiscal 2025-2028 volume CAGR, 8.2% fiscal 2028 EBITDA margin, and 16.3x September 2027 estimated EV/EBITDA, in line with the average of MSIL and HMI.

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