1:2 Split Ahead: Tata's Auto Stock Rises 17.4% From 52-Week Low; Geojit Gives HOLD Rating, Target Rs 855

Tata Motors' share price has witnessed massive correction in the past six months, erasing its Rs 1,000 mark. However, the start of December 2024 has been bullish so far, with the stock gaining by 3.24% last week on BSE. Due to the latest upside, this Tata Group-backed auto giant has widened its gap with a 52-week low. Now, the stock is up by over 17% from its 1-year lows. The latest recommendation is of HOLD by brokerage Geojit who has set a Rs 855 target price. Tata Motors business is set to split into two and list as separate companies.

Tata Motors Share Price:

Last week, on December 6, Tata Motors' share price closed at Rs 816.75 apiece, up by 3.05% on BSE with a market cap of Rs 3,00,645.00 crore. The stock's weekly gains are now 3.24%, which also puts Tata Motors in positive for YTD performance which is up by 3.3%. That being said, the stock is up by 17.4% from its 52-week low of Rs 695.90 apiece.

The company's price-to-equity ratio is at 32.10x, while the return on equity is at 30.57% which is strong.

At the start of December, Tata Motors reported that it recorded sales of 74,753 vehicles in both domestic and international markets in November 2024, which is mildly higher than sales of 74,172 units during November 2023. The company's total sales for MH&ICV Domestic & International Business in November 2024, including trucks and buses, stood at 13,230 units compared to 12,895 units in November 2023.

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.

HOLD Tata Motors Stock:

In its latest report, Geojit said, "Tata Motors is well-positioned for long-term growth in the automobile industry, supported by a diverse product range, increasing electric vehicle (EV) and compressed natural gas contribution, and capacity expansion. While its JLR division faces short-term production challenges despite strong global demand, the PV business is set to gain momentum with new launches."

Additionally, the brokerage added, "The CV segment is expected to grow, driven by the government's infrastructure push. However, The current price level suggests limited upside potential. Hence, we reiterate our HOLD rating on the stock with a revised target price of Rs. 855 based on SOTP valuation."

As per the financial results report for Q2FY25, Tata Motors delivered revenues of ₹101.5K Cr (down 3.5%), EBITDA at ₹11.6K Cr (11.4%, down 230bps) and EBIT of ₹5.6K Cr (5.6%, down 190bps) in a challenging external environment. PBT (bei) for Q2 FY25 stood at ₹5.8K Cr down ₹391 Cr while Net Profit was ₹3.5K Cr. For H1 FY25, the business reported a strong PBT (bei) of ₹14.6K Cr, an improvement of ₹2.9K Cr over the previous year.

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.