Tata Group-backed automobile giant, Tata Motors' share price witnessed a buying trend on the first day of the New Year 2025, however, the heavyweight auto stock continued to trade near its 52-week low. The stock is over Rs 31 away from hitting its 1-year lows. Despite this, brokerages have upgraded their stance on Tata Motors to BUY. The target price for 2025 is the highest to near Rs 1,200 on the stock. In January 2025, Tata Motors will focus on its commercial price hike, sales data, and also upcoming split of business into two commercial and passenger vehicle segments with demerger ratio of 1:1.
Tata Motors Share Price:
After market hours of January 1st, Tata Motors stock price ended at Rs 749.25 apiece, up by 1.2% on BSE with market cap of Rs 2,75,808.28 crore. The stock is over Rs 31 away from touching its 52-week low of Rs 718.00 apiece, while the stock dipped significantly from its 52-week high of Rs 1,179.05 apiece.
The stock's price-to-equity ratio is at 29.45x, while the return on equity is at 30.6% which is strong. It is believed that Tata Motors is undervalued, trading below its potential. And that makes it an attractive bet!
Tata Motors Sales:
The December 2024 sales of Tata Motors are subdued. In Q3FY25, the company recorded sales of 2,35,599 vehicles including both domestic and international markets, which was marginally up from sales of 2,34,981 units during Q3 FY 2023-24. The sales of commercial vehicles were down 1% YoY to 95,770 units, while passenger car sales inched up by 1% YoY to 1,39,829 units in Q3FY25.
In December 2024 alone, the company recorded sales of 76,599 units on the domestic front, which was up by 1% YoY. Domestic & International sales for MH&ICV in Dec 2024, was 16,604 units vs 17,591 units in Dec 2023; while in Q3 FY25 it stood at 46,108 units, vs 46,534 units in Q3 FY24.
Girish Wagh, Executive Director, Tata Motors said, Propelled by a resurgence in construction and mining activities post-monsoon, plus the festive season demand, the HCV segment witnessed robust sequential quarter on quarter (QoQ) growth in sales during Q3 FY25, even as the YoY sales declined 9% due to limited growth in end-use segments. The ILMCV segment witnessed ~3% YoY growth, driven by strong demand, with the MCV segment continuing its robust growth trajectory to record a 40% YoY increase during Q3FY25.
Wagh added, "Continuing its strong momentum, the Passenger Carrier segment witnessed a 30% YoY sales growth in Q3 FY25, with healthy demand from State Transport Undertakings (STUs) and the Staff/Tour & Travel segments. Small and light commercial vehicle sales experienced a marginal YoY decline of ~2% in Q3 FY25, primarily due to ongoing financing challenges faced by first-time users and rental customers in this category."
Looking ahead, Wagh said, "We expect demand to improve in Q4 FY25 across most segments of the CV industry. The key aspects to watch out for in 2025 will be the government's focus on infrastructure spend, and growth in end-use segments, which will augur well for the commercial vehicles industry."
Tata Motors Transfer Agent:
The company has also announced that consequent upon the acquisition of Link Group by Mitsubishi UFJ Trust & Banking Corporation, Link Intime India Private Limited will now be known as MUFG Intime India Private Limited. The said change of name is effective December 31, 2024.
Accordingly, the name of our RTA's will now be MUFG Intime India Private Limited. We request you to take note of the same and update in your records the name of MUFG Intime India Private Limited as the RTA's of the Company.
Tata Motors Prices Hike:
From January 1, 2025, the company has hiked the prices of its trucks and buses portfolio by 2%. The portfolio is part of its commercial vehicle segment.
Tata Motors Demerger:
Secondly, a key development to watch out for is Tata Motors' split-up of business in a 1:2 ratio. 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.
The demerger ratio is 1:1, which means that shareholders of Tata Motors will have identical shares in both the listed companies.
Will Tata Motors Touch the Rs 1,000 Mark In 2025?
Brokerage DAM Capital is the latest to upgrade on Tata Motors. The broker has given BUY from its previous rating of NEUTRAL with target price of Rs 870 per share. It expects Jaguar Land Rover's (JLR) volumes to record 6.5% CAGR over financial year 2025-2027. Notably, it also expects mildly lower margins and lower valuation multiples for Tata Motors businesses like PV, CV and JLR.
Also, Emkay Global has upgraded its rating on Tata Motors to BUY.
Meanwhile, Tata Motors is expected to hit not only Rs 1,000 mark but also reach near Rs 1,100 levels in 2025. Brokerage has set the highest target for 2025 at Rs 1,099.
For Tata Motors, Sharekhan has highlighted that --- 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. While global challenges continue, JLR believes its volume and production would recover sharply in H2FY2025. Historically also, JLR has performed better in H2 compared to H1 in a given financial year.
Further, Sharekhan's note said, JLR has maintained its guidance of GBP30 bn of revenue, greater than or equal to 8.5% EBIT and net cash positive for FY2025. While hydrogen fuel cell technology is at a nascent stage, Tata Motors has been making efforts to secure its growth prospects in the hydrogen space in future.
On the valuation, Sharekhan's note said, "We have a BUY rating on Tata Motors based on expectations of continued improvement in JLR, PV, and CV businesses as well as reduced net automotive debt."
Among key risks for Tata Motors in 2025 is that --- any slowdown or cyclical downturn in any of the locations where the company has a strong presence can affect business and profitability
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