Tata Group Stock Can Surge 31%, Says Motilal Oswal

Motilal Oswal believes that the share price of Tata Motors Limited can surge significantly by 31%. The brokerage did a coverage report after interacting with the management team of Tata Motors. Motilal Oswal feels that this large cap automotive company will recover and its share price can reach to Rs 540 per share.

The company management is focusing on making Jaguar Land Rover as a premium luxury brand by focusing on its brand pull strategy and redefining Jaguar with premium positioning in the era of Evs. It intends to improve its supply, production, margins, working capital release and reduce its debt to near zero levels by FY25.

To revolutionize Jaguar brand Tata Motors will introduce the first BEV Jaguar, which would be significantly different from the current model and it is beginning its journey with its key RR/RRS products in CY24. "By CY26, all of its important models would come with a BEV option. It has a busy timeline of BEV launches, with the RR (RR/RRS) in CY24 and Jaguar in CY25." was mentioned in the brokerage report.

Company's India commercial and passenger vehicle business will ramp up. "The management focuses on increasing value through innovations in terms of goods, services and other solutions, rather than increasing the market share through discounts. LCVs, which have witnessed a robust post-Covid recovery, are likely to moderate. The management indicated that pent-up demand and post-Covid euphoria seen in the PV segment are slowly abating. Hence, it expects the PV industry to grow by 5-7% in FY24." pointed out Motilal Oswal.

Plus the company intends to raise capital through an IPO of its technology firm arm, it will help India business to reduce further debt and move closer to becoming net debt free by FY24> the current market capitalisation of the company is Rs 1,37,121.70 crore and the net debt till decemnber quarter was reported as Rs 57,000 crore.

According to Motilal Oswal report, "Tata Motors Limited, should witness a gradual recovery as supply-side issues ease for Jaguar and commodity headwinds stabilize for the India business. So eventually it will benefit from: a macro recovery in India, company-specific volume/margin drivers, and a sharp improvement in free cash flow(FCF) and leverage in JLR as well as the India business. The stock trades at 15.2x/12.3x FY24E/FY25E consolidated P/E and 3.8x/3.2x EV/EBITDA. We reiterate our BUY rating on the stock with a target price of approximately Rs 540 per share (Mar'25E-based SoTP)"

The latest stock price of Tata Motors Limited is Rs 412.30 per share, it is up by 0.26% on intraday basis. Its 52-week high and 52-week low is at Rs 494.50 per share and Rs 366.05 per share respectively. In last one year the stock price has fallen by mere 4.84%, and over three years it has grown massively by 465.87%.

Disclaimer:

The stock has been picked from the brokerage report of Motilal Oswal, Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.