Tata Motors continues to remain our top pick, given its improving India franchise, early leadership in EVs in India, and JLR’s aggressive cost controls, said YES Securities.
“Standalone business is in the sweet spot led by healthy cyclical recovery both in PV and CV whereas favorable product cycles help drive JLR outperformance. The recent valuation contraction makes Tata Motors even more attractive play among OEMs,” it said while suggesting a target of Rs 615 on the stock, suggesting up to 50 percent potential upside
On Friday, the scrip surged 10 per cent to hit a high of Rs 411 on BSE.
Jhunjhunwala held 1.18 per cent stake in the Tata Group firm as of March 1, which valued at Rs 1,607.30 crore as of today.
Tata Motors reported a narrowing of consolidated loss to Rs 1,032.84 crore for the March 2022 quarter compared with Rs 1,516.14 crore in the December quarter and Rs 7,605.40 crore in the same quarter last year.
Ebitda margin for the quarter came in at 11.2 per cent, down 320 basis points. Ebit margin at 3.2 per cent fell 410 basis points, the Tata group firm said.
“Tata Motors’ results were higher than estimates, due to margin surprise in the JLR and India business. India business is firing on all cylinders, with up-cycle in CVs, market-share gain in PVs and margin improvement across segments. That said, JLR’s near-term outlook is weak due to macro headwinds. JLR volumes may reach a higher scale only in H2FY23,” said
while suggesting a target of Rs 510.
On JLR, Tata Motors expects to improve progressively and is targeting a 5 per cent Ebit margin and £1 billion plus positive free cash flow in FY23 for the full year. In the CV segment, the company showed intent to step-up its investments in products and new business models.
In the PV segment, Tata Motors said it will continue to drive strong sales performance whilst improving profitability and managing supply bottlenecks.
Tata Motors reported an Ebitda of Rs 8,700 crore in March quarter, which was in line with our estimate, as India compensated for the miss at JLR, said
“For JLR, volume ramp-up continues to be elusive due to reasons beyond its control. As a result, we are impelled to slash FY23 and FY24 volumes (conservatism given muted macros).
said favourable mix, sales recovery and cost saving initiatives are expected to
support margins going ahead while focus on debt reduction will aid balance sheet strength. “In addition, Tata Motors’ EV portfolio is leading the domestic EV space and by securing strategic investors, it is well poised to build on its initial success,” it said while suggesting a target of Rs 585 on the stock.
Kotak finds Tata Motors the best bet to play on global automotive cycle recovery following the recent correction. This brokerage has a target of Rs 470 on the stock. Motilal sees the stock at Rs 485.
“JLR’s strong order book of over 1,68,000 units would result in strong volumes in H2FY23. We believe lower capex and global recovery would support JLR, while improving PV business and focus on cost control would improve TTMT’s standalone margin. Moreover, tight control on capex and R&D would lower its automotive debt to greater extent over the next 2-3 years,” said
Securities. This brokerage has a target price of Rs 615 on the stock.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)