Tata Motors Share Price: Bearish unrest continues in the Tata Group-backed automobile player, Tata Motors throughout 2024 so far. The once 2023 Nifty 50 gainer, has now given zero returns in its year-to-date performance. The stock is down by more than 34% from its 52-week high. On November 14th alone, the stock dipped by nearly 2% despite big demerger update. Nonetheless, there is a buy-on-dips opportunity as brokerage Sharekhan continues to be bullish on Tata Motors.
Tata Motors Share Price:
After market hours of November 14th, the stock price of Tata Motors closed at Rs 774.25 apiece, down by 1.6% on BSE with a market cap of Rs 2,85,000.79 crore. The stock is nearing its 52-week low of Rs 656.65 apiece. While the stock has nosedived by 34.33% from its 52-week high of Rs 1,179.05 apiece.
Tata Motors' weekly performance is down by 4.20%, while in a month, the downside widened by 15.40% on BSE so far. In six months, the stock dipped by 18%, while its YTD performance is lower by 2%.
Tata Motors Demerger Update:
As per media reports, Tata Sons, the parent company of Tata Motors is likely mulling to create a holding company for Tata Motors' two main businesses namely passenger cars and commercial vehicles business which are expected to demerge soon and be listed as two separate entities.
It is also reported that the board of directors panel of these two entities will also be refreshed.
Simply put, the auto player is set to split in the ratio of 1:2. The company is planning the demerger of Tata Motors 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.
Tata Motors split-up into two is among the most awaited demergers of 2024.
Sharekhan On Tata Motors:
According to Sharekhan's latest report, as anticipated Tata Motors Limited's (TML) Q2FY2025 performance was subdued due to temporary issues in JLR, given that management has already indicated a probable production constraint in JLR's business in Q2 due to supply issues related to aluminium and industry-related headwinds faced by the domestic business. However, management has indicated a sharp revival in JLR's volumes, production, and profitability in H2FY2025 on the resolution of temporary issues and, hence, has maintained its full-year guidance for FY2025.
The brokerage cited that Tata Motors' management has shared a cautious outlook for the near term in its domestic business but remained hopeful for recovery in H2FY2025, following the improvement in macros.
On the valuation, Sharekhan said, "JLR's subdued performance in Q2FY2025 was in line with expectation, though the sharp rise in VMEs was surprising. Given management has guided for a revival in production in H2FY2025 and, hence, maintained its full-year guidance for FY2025, we believe a shortfall in Q2FY2025 would be substantiated in the coming quarters. Historically also, JLR has performed better in H2 compared to H1 in a given financial year."
Assuming a challenging industry structure in the domestic market, it is encouraging to know that TML has been sustaining its double-digit EBITDA margin in the CV business. The net automotive debt is expected to come down in the coming quarters with the expectation of easing working capital pressure on increasing JLR volumes. Management continues to focus on sustaining its operating profitability in the domestic PV and CV businesses and expects commodity prices to remain range-bound in the near term, the brokerage highlighted.
An EV battery cell plant within the group would help the company achieve speedy product validation and reduce the dependence on third-party suppliers. While hydrogen fuel cell technology is at a nascent stage, TML has been making efforts to secure its growth prospects in the hydrogen space in future, it added further.
Given that JLR's production restrictions are only transitory and that the structural pace has been maintained, Sharekhan's note said, "We maintain our BUY rating on TML with a revised PT of Rs. 1,099 based on expectation of ongoing improvement in the JLR, PV, and CV sectors, as well as lower net automotive debt."
Part of the USD 165 billion Tata Group, Tata Motors, a USD 44 billion organisation, is a leading global automobile manufacturer of cars, utility vehicles, pick-ups, trucks and buses.
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