1:2 Split, 300-310% Dividend Ahead: Tata's Auto Giant Makes Big Growth Announcements; Buy For Rs 1,192/TP

Tata Group's automobile giant, Tata Motors has announced the next phase of growth plans across businesses while aiming to achieve net zero emissions by 2045. The auto player continues to take concerted measures for a long-term value accretive growth model that delivers strong and consistent returns. Speaking of returns, Tata Motors has surged by nearly 17% on BSE YTD. There is a further potential for gains.

Although the stock ended the May month in the red zone with a drop of 8.43% to exit at Rs 922.85 apiece on BSE with a market cap of Rs 3,06,753.39 crore, Tata Motors has a buy-on-dips opportunity. The latest to like the stock is Yes Securities which recommends investors ADD the stock to their portfolio for the target of Rs 1,192. This would be a potential 29% upside ahead.

In June month, Tata Motors will reward investors with a 300-310% dividend payout and has fixed the record date for the same.

In its latest automobile report, Yes Securities selected Tata Motors as its top pick despite expecting a flat to low single-digit decline for CV and PV respectively high single-digit growth for PV, flat for CVs and mid-single digit decline for PV and tractors for the automobile sector in May sales. The brokerage said to ADD Tata Motors for a target price of Rs 1,192.

Tata Motors Big Growth Outlook:

In the annual report for FY24, N Chandrasekaran, chairman of Tata Motors told shareholders "I am happy to see Tata Motors continuing to take concerted actions to be future-ready and to create a long-term value accretive growth model that delivers strong and consistent returns for our shareholders whilst becoming a net zero-emission Company."

In the commercial vehicles business, Chandrasekaran said, "Over the next phase, the business will focus on driving the following - Revenue growth, improving EBITDA, strong free cash flows, strong Return on Capital Employed, technology and brand leadership. Apart from vehicular sales, the business will also focus on vehicle-linked businesses like spares, digital and smart mobility solutions which will help reduce the volatility of the vehicle sales business. This should help drive consistent value accretive growth in the coming years."

Moreover, in the case of the passenger vehicles business, Chandrasekaran said, Over the next phase, the PV business will focus on the following - Market beating growth, improving EBITDA, positive free cash flows, enhanced customer experience, technology, and brand leadership. The competitive intensity in this portfolio will remain high and the business will continue to invest in products, platforms, electrical & electronic architectures, and vehicle software to remain competitive."

He also said that the PV business will focus on significantly improving customer experience and enhancing product quality.

According to Chandrasekaran, the company's EV business will focus on driving up penetration through multiple product launches, focus on market development, charging network enhancements and continuing to introduce aspirational product features.

In regards to Tata Motors premium car brand, JLR, Chandrasekaran said, Over the next phase, JLR will continue to double down on its journey to become a premium luxury OEM, deliver strong revenue growth, improve profitability further, drive positive free cash flows, focus on enhanced customer love and continue to invest in products and technologies.

Chandrasekaran revealed that there is an exciting range of products lined up to be launched over the next 3 years that needs to be delivered successfully. The first electric Range Rover launches later this year, and there are further EVs lined up in the coming years including the all-electric Jaguar.

He furthermore said, "JLR shall continue to invest in products, platforms, electrical & electronic architectures and vehicle software to provide a world-class in-cabin and all-around customer experience to our discerning clientele.

Tata Motors Dividend:

Tata Motors has fixed Tuesday, June 11, 2024, as the "Record Date" to determine the entitlement of Members to receive the aforesaid dividend for the financial year ended March 31, 2024.

While the payment of such dividend, if approved by the shareholders at the AGM, shall be distributed amongst them, on or before Friday, June 28, 2024, and will be made subject to deduction of tax at source.

This auto giant is set to pay a final dividend of ₹6.00 per Ordinary Share of the face value of ₹2 each (i.e.,@ 300%) (comprising of ₹3.00 normal dividend and ₹3.00 special dividend) and ₹6.20 per 'A' Ordinary Share of the face value ₹2 each (i.e.,@ 310%) (comprising of ₹3.10 normal dividend and ₹3.10 special dividend) for the financial year ended March 31, 2024.

Tata Motors Split Into 2 Businesses:

Tata Motors board has approved the demerger of the company into two separate listed companies housing A) the Commercial Vehicles business and its related investments in one entity and B) the Passenger Vehicles businesses including PV, EV, JLR, and its related investments in another entity.

On the demerger, Chandrasekaran said, "To enable execution of these well differentiated strategies and to further
empower each business to pursue it purposefully with greater agility and accountability, the Board has proposed
the demerger of the Company into two separate listed companies housing A) the Commercial Vehicles business and its related investments in one entity and B) the Passenger Vehicles businesses including PV, EV, JLR and its related investments in another entity."

Further, he said, This will also help secure the considerable synergies across PV, EV and JLR particularly in the areas of EVs, autonomous vehicles, and vehicle software. This will lead each Company to deliver a superior experience for customers, better growth prospects for employees and, enhanced value for shareholders.

Tata Motors Limited (TML), a $44 billion organisation, is a leading global automobile manufacturer, offering a diverse portfolio of smarter, integrated and safer mobility solutions.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.