Tata Motors (TMCV)

FairStock Score: 20/100 — RISKY

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Sales growth of 19.74% and profit growth of 31.66% show strong recent momentum
• Promoter holding of 42.56% indicates aligned long-term ownership
• Piotroski F-Score of 6/9 suggests improving fundamentals
• Latest quarter net profit of ₹561 Cr on sales of ₹20,404 Cr shows positive, though thin, earnings

Concerns

• Extremely expensive on earnings: P/E of 408.60, P/B of 15.52, and EV/EBITDA of 21.32
• ROCE is 0.00% and ROE is N/A, indicating very poor return on capital
• Net margin is under 3% in the latest quarter, leaving little cushion
• Debt/Equity of 0.88 and zero dividend yield add financial risk

AI Analysis

At ₹431.85, Tata Motors commands a market cap of ₹1.86 lakh crore, yet the trailing earnings justify a P/E of 408.60. That is not the kind of number Graham would call a margin of safety. Book value is just ₹27.83, so I am being asked to pay 15.52 times book for a business whose return on capital is essentially zero. ROCE is 0.00%, and ROE is not even calculable. This is a capital-intensive commercial-vehicle cycler, not a compounding machine. The recent growth looks encouraging: sales up 19.74%, profit up 31.66%, and the latest quarter shows ₹20,404 crore of sales with ₹561 crore of net profit. But that net margin is under 3%, and one strong quarter in a cyclical upswing is not proof of durable earning power. Debt/equity of 0.88 means the balance sheet carries real leverage. At 21.32 times EV/EBITDA, the market is placing a rich multiple on cyclical earnings. The PEG of 10.29 reinforces that today's growth is more than fully priced. What do I like? Promoter holding is solid at 42.56%, and the Piotroski F-score of 6 suggests improving fundamentals, though not exceptional. Tata has a franchise in Indian commercial vehicles, and if the cycle continues, profits could surprise. But I do not pay a P/E of 400 for cyclical peaks, nor do I rely on hope. With zero dividend yield, I am not paid to wait. This is a cyclical business with a valuation that embeds perfection. In Graham's language, I would wait for a price that offers a margin of safety. Today, that margin is missing.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer