In a major good news for investors, Tata Motors has finally fixed the record date for its 300% dividend on ordinary shares and 310% payout on DVR shares. Tata Motors which is set to split into 1:2, is among the top dividend-paying auto stocks. Brokerage JM Financial has recommended BUY on Tata Motors due to its healthy all-round performance in FY24, and de-leveraging on track. The target price set by JM is Rs 1,200 on Tata Motors, which signals a potential 27% upside from its current price level.
Tata Motors Share Price:
Tata Group-backed auto giant is a multi-bagger and has given significant returns to its investors.
On NSE, Tata Motors' share price stood at Rs 943.50 apiece with a market cap of Rs 3,13,594.77 crore. The stock's 52-week high and low is at Rs 1,065.60 apiece and Rs 516.40 apiece respectively.
Tata Motors' share price has gained by 19% YTD, while in a year, the stock zoomed by 82%. In 5-years, the stock further gained by 447%. But its all-time gains are massive by 2,873.53%. Tata Motors shares once stood at Rs 31.73 level on January 1, 1999.
Tata Motors Dividend:
Tata Motors announced that it has fixed Tuesday, June 11, 2024, as the "Record Date" for the purpose of determining the entitlement of Members to receive the aforesaid dividend for the financial year ended March 31, 2024.
While the payment of such dividend, if approved by the shareholders at the AGM, shall be distributed amongst them, on or before Friday, June 28, 2024, and will be made subject to deduction of tax at source.
This auto giant is set to pay a final dividend of ₹6.00 per Ordinary Share of the face value of ₹2 each (i.e.,@ 300%) (comprising of ₹3.00 normal dividend and ₹3.00 special dividend) and ₹6.20 per 'A' Ordinary Share of the face value ₹2 each (i.e.,@ 310%) (comprising of ₹3.10 normal dividend and ₹3.10 special dividend) for the financial year ended March 31, 2024.
Tata Motors Split:
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.
JM Financial On Tata Motors:
In its latest research note, JM Financial said, that management indicated higher marketing spending going forward to drive JLR's order book. FY25 EBIT margin is expected to be flat. Strong FCF generation is expected to support investments towards electrification at JLR and the company is on track to turn net cash by FY25 (£0.7bn currently).
On the domestic front, JM's note said, "In the domestic PV segment, new launches/ramp-up of capacity is expected to drive growth. Domestic CV demand is also expected to pick up from 2Q. Improving margins for both domestic CV and PV segments augurs well and the net cash position in India's auto business provides comfort. Maintain BUY with Mar'25 SOTP of INR 1,200 (standalone / JLR valued at 12x / 3.0x EV/EBIDTA). The slowdown in key global markets remains monitorable."
Notably, JLR has guided for a flattish EBIT margin in FY25 over FY24 (c.8.5%). FY25 investment guidance stands at over ~£3.5bn (£3.3bn in FY24). Current net debt stands at £0.7bn (vs. £3bn at FY23 end) and the company expects to turn net cash by FY25.
For the commercial vehicle business, JM cited that Tata Motors management is expecting CV demand to pick up from 2QFY25 (1Q to remain muted owing to general elections). Overall, it expects the CV industry to report a flattish to a slight decline in volumes during FY25. The continued focus of GOI on infrastructure spending remains an industry tailwind for the medium-to-long term. The company's focus will be on improving market share in the SCV segment, driving higher realisation for the overall CV business and scaling up e-CVs.
In the case of the passenger vehicles segment, Tata Motors management indicated that 1) softening of key RM prices (incl. battery cost), 2) higher operating leverage, and 3) PLI incentive is expected to support EV business margins going ahead. The near-to-medium-term focus is on driving EV penetration by leveraging an expanded range of products and expanding charging infrastructure. Concerning ICE business, recently launched CNG variants are driving growth. The company indicated that it plans to launch Tata Curvv in 2H 2024 and Tata Sierra in 2H 2025 in addition to multiple refresh/facelift models going forward. Sanand facility commenced production in Jan'24. Currently, it produces 6.5k cars/month and TTMT plans to ramp this up gradually to 10k/15k cars/month going forward.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.
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