DCF Studio

    TMPV.NS · NSI · Consumer Cyclical

    Tata Motors Passenger Vehicles Limited

    Also onConsensus Drift

    Implied value per share

    INR -220.80

    Market price

    INR 303.80

    Implied upside

    -172.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 8.5% of revenue against depreciation of 6.5%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    INR -220.80-172.7%
    Exit multiple
    INR -27.69-109.1%
    Market price
    INR 303.80

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    -122257225015-611286125080FY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 3302.8bnINR 3272.0bnINR 3241.5bnINR 3211.4bnINR 3181.4bn-0.9%
    EBITINR -73.2bnINR -72.5bnINR -71.8bnINR -71.2bnINR -70.5bn+0.9%
    NOPATINR -54.8bnINR -54.2bnINR -53.7bnINR -53.2bnINR -52.7bn+0.9%
    Add depreciation & amortisationINR 215.1bnINR 213.1bnINR 211.1bnINR 209.1bnINR 207.2bn-0.9%
    Less capital expenditureINR -280.0bnINR -277.4bnINR -274.8bnINR -272.3bnINR -269.7bn-0.9%
    Less increase in working capitalINR -2.6bnINR -2.6bnINR -2.5bnINR -2.5bnINR -2.5bn-0.9%
    Free cashflow to firmINR -122.3bnINR -121.1bnINR -120.0bnINR -118.9bnINR -117.8bn+0.9%
    Discount factor0.95340.86650.78760.71590.6507-
    Present valueINR -116.6bnINR -105.0bnINR -94.5bnINR -85.1bnINR -76.6bn+10.0%
    Present Value Of The ForecastINR -477.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate6.80%INR assumption - no free live source available for this market (assumption)
    Equity risk premium8.00%Market assumption
    Beta0.851Reported 0.778, pulled toward 1.0 (Blume)
    Cost of equity13.61%Risk-free + beta x equity risk premium
    Cost of debt6.80%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationINR 1118.9bn57.9% of capital
    Total debtINR 814.0bn42.1% of capital, book value as a proxy
    Tax rate25.2%Effective, capped at statutory
    WACC10.02%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareINR -220.80

    0% of EV

    Terminal value, undiscounted
    INR 0.00
    Terminal value, discounted
    INR 0.00
    Enterprise value
    INR -477.7bn
    Less net debt
    INR 335.7bn
    Equity value
    INR -813.4bn

    Exit at 8.0x EBITDA

    Value per shareINR -27.69

    304% of EV

    Terminal value, undiscounted
    INR 1093.3bn
    Terminal value, discounted
    INR 711.4bn
    Enterprise value
    INR 233.7bn
    Less net debt
    INR 335.7bn
    Equity value
    INR -102.0bn

    Sensitivity

    Value per share (INR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.02%-226.41-226.41-226.41-226.41-226.41
    9.02%-223.55-223.55-223.55-223.55-223.55
    10.02%-220.80-220.80-220.80-220.80-220.80
    11.02%-218.14-218.14-218.14-218.14-218.14
    12.02%-215.59-215.59-215.59-215.59-215.59

    Outlined: this model. Green text: above today's price of 303.80. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    EBIT margin-2.2%6.7%+9.0pp
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    Yahoo Finance and RBA data. General information, not advice. Methodology.