Jaguar Reports Poor Wholesale Volumes, Top Tata Group Stock Falls 5% Today, Buy Stock: Motilal Oswal

Updated: Monday, October 10, 2022, 13:04 [IST]

On weak global cues, Indian stock markets are down today, weighted by a sharp decline in automobile stocks. Tata Motors is one of the top losers, dropping by around 5% in trade. Motilal Oswal, a leading brokerage firm suggested buying this large-cap Tata group stock for high returns in the short term.

Brand growth - Jaguar Land Rover (JLR)

Jaguar Land Rover (JLR)'s 2QFY23 wholesale volumes (ex-China JV) grew just 4% QoQ to 75.3k units. Wholesales continued to be adversely affected by chip shortages. Substantially this lower-than-estimated whole sales would result in lower 2QFY23 estimates. This poor result led to a sharp fall in Tata Motors' share price on NSE today. For JLR, revised revenue/EBITDA/PAT estimates stand at GBP4.9b/GBP574m/-GBP4m in 2QFY23, respectively.

Stock To Buy: Target Price

The Current Market Price (CMP) of Tata Motors is around Rs. 396.45. Motilal Oswal has estimated a Target Price for the stock at Rs. 510. This stock has the potential to give a 28.7% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 131,634 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 396.45
Target Price	Rs. 510
Potential 1 year return	28.70%
52 week high share price	Rs. 536.70
52 week low share price	Rs. 366.20

Double digit growth in retail sales

Tata Motors' retail sales grew 12% QoQ (-5% YoY) to 88.1k units. Retails were higher QoQ in China (+38%), North America (+27%) and overseas (+14%) but were lower in the UK (-7%) and Europe (-4%). Additionally, order book as on September 30, 22 has grown to almost 205k units, up by ~5k units from June 30, 22 level. Demands for the new Range Rover, new Range Rover Sport and Defender are particularly strong with orders accounting for over 145k units of the 205k units. JLR expects sales to improve over the remaining financial year as chip shortages ease.

Stock upside

According to Motilal Oswal, "All 3 businesses of Tata Motors are in the recovery mode. While the India CV business will see a cyclical recovery, the India PV business is in a structural recovery mode. JLR is also witnessing a cyclical recovery, supported by a favorable product mix. However, supply-side issues will defer the recovery process. While there will be no near-term catalysts from the JLR business, the India business (~50% of SoTP) will see a continued recovery."

Company Portfolio

Tata Motors Group (Tata Motors) is a $37 billion organization. It is a leading global automobile manufacturing company. Its diverse portfolio includes an extensive range of cars, sports utility vehicles, trucks, buses, and defense vehicles. Tata Motors is one of India's largest OEMs offering an extensive range of integrated, smart, and e-mobility solutions.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.