1:2 Split, 300-310% Dividend: Tata's Auto Co Makes Big Incentives Announcement; 1-Yr Average Target Rs 1,070

Tata Group-backed Tata Motors is trading below Rs 950, giving room for further buying and fetching short-term gains. On May 23, Tata Motors stock traded marginally up on the BSE. The performance is after the auto giant made massive incentive announcements for employees under its ESOP schemes. The highest and long-term target on Tata Motors is Rs 1,235 with a buy recommendation from Sharekhan.

Tata Motors Share Price:

At the time of writing, Tata Motors' share price stood at Rs 946.95 apiece on BSE, broadly flat with a market cap of Rs 3,14,741.46 crore. The stock's 52-week high and low is at Rs 1,065.60 apiece and Rs 509.10 apiece. YTD, the stock is up by 20%.

Tata Motors ESOP Scheme:

In its regulatory filing on May 22, Tata Motors announced that the Allotment Committee of the Company has, today, approved the allotment of 2,39,911 Ordinary Shares of the face value of ₹2 each under the Scheme to the eligible employees under the exercise of stock options at an exercise price of ₹345 per share.

Also, aforesaid allotment, the paid-up Ordinary share capital of the Company stands increased from ₹6,647,955,507 divided into 3,32,37,39,001 Ordinary Shares of ₹2 each to ₹6,64,84,35,329 divided into 3,32,39,78,912 Ordinary Shares of ₹2 each (considering the amount of subscribed share capital plus shares forfeited less calls in arrears).

Tata Motors Long Term Incentive Scheme 2024:

According to Tata Motors, the ESOP Allotment Committee has approved the issuance of Performance Share Units ("PSUs") to the Eligible Employees of the Company and its subsidiary companies as per the SEBI (Share Based Employee Benefits) Regulations, 2021 not exceeding 50,00,000 Ordinary Shares in the Company, subject to approval of the shareholders at the ensuing Annual General Meeting. The aforesaid allotment of Ordinary Shares may lead to a maximum dilution of 0.13% of the total issued share capital of the Company.

Tata Motors Dividend:

Apart from incentives to employees, Tata Motors announced a final dividend of 300% amounting to Rs 6 per share to investors holding its ordinary shares, while it announced a final dividend payout of 310% worth Rs 6.10 per share having a face value of Rs 2 each, higher than the dividend that ordinary shareholders will get.

Tata Motors Demerger of 1:2:

This comes ahead of Tata Motors' merger into two. 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.

Tata Motors Earnings:

During the fourth quarter of FY24, the Tata Group-backed top auto player bagged a consolidated net profit of Rs 17,407.18 crore, rising by 107.4% YoY. Also, Tata Motors' consolidated revenue jumped by 13.51% YoY to Rs 119,213.35 crore.

Also, JLR continued its strong financial performance trend in the financial year, with another record-breaking quarter in Q4 FY24. Revenue for the quarter was £7.9 billion, up 11% versus Q4 FY23 and up 6% versus Q3 FY24. Revenues for FY24 were £29.0 billion - JLR's highest-ever full-year revenue and up 27% compared to the prior year.

BUY Tata Motors:

As per Trendlyne data, the consensus recommendation from 31 analysts for Tata Motors Ltd. is HOLD. Of the total, 11 analysts have suggested 'STRONG BUY', while 7 analysts have advised 'BUY'. The average 1-year target is Rs 1,070, hinting at a 13% short-term upside from CMP.