1:2 Split Ahead: Tata's Auto Stock Rs 112 Away From 52-Week Low, New Truck Launched; ICICI Direct Says BUY

Tata Motors Share Price: Tata Group-backed automobile giant, Tata Motors stock price witnessed sharp surge of 1.5% to end at Rs 783.40 apiece on November 19, 2024. On the current market price, the stock is away by Rs 112.8 from hitting its 52-week low of Rs 670.60 apiece. This brings the question is there any buying opportunity in Tata Motors, and does it have the potential to hit Rs 1,000 mark?

Tata Motors share's 52-week high and low is at Rs 1,179.05 apiece and Rs 670.60 apiece. The heavyweight auto stock's weekly performance is down by 2.5%, and its monthly performance has dropped by 13.3%.

Not just that, the auto giant which a 2023 top Nifty gainer, is now in red YTD of 2024. The stock is nearly 1% down year-to-date.

The company's market cap is at Rs 2,88,368.90 crore. Tata Motors is also the second largest stock of Tata Group.

Tata Motors New Launch:

On November 19, the company launched its first automated manual transmission (AMT) truck, the Tata Prima 4440.S AMT, in the Kingdom of Saudi Arabia. Based on its flagship platform, the Prima 4440.S AMT is built with the company's global expertise to deliver unmatched reliability and performance.

As per the statement, equipped with a powerful drivetrain, robust aggregates and a comfortable cabin, the new truck perfectly blends driver comfort and fuel efficiency to offer higher productivity and profitability to its customers. Additionally, Tata Motors showcased five of its high-performance products at the Heavy Equipment and Trucks (HEAT) Show in Dammam, which are designed and engineered to suit the country's requirements and cater to a wide variety of applications.

Tata Motors' range of trucks are complemented by comprehensive value added services, provided in partnership with its official distributor, Mohamed Yousuf Naghi Motors Co. Customers across the Kingdom will benefit from a wide network of service touchpoints, skilled technicians, and easy access to Tata Genuine spare parts that maximise vehicle uptime and enhance overall customer satisfaction.

Time To BUY Tata Motors Share?

Brokerage ICICI Direct is the latest to like Tata Motors stock. On the valuation, the brokerage said, "TML now has portfolio stock attributes i.e. healthy margins & return ratios profile and low leverage on B/S. With stock correcting ~30% from the top, we believe it offers attractive risk reward play at CMP for long term wealth creation. We assign BUY rating and value it at ₹ 1,000 on SOTP basis."

The brokerage highlighted two key factors for recommending BUY. These are:

1. Domestic business to consolidate on high base, focus on profitability:

Long term prospects for both the vehicle categories are optimistic, with growth rate projected at ~5-8% CAGR, driven by underpenetrated PV market and infrastructure led growth thrust domestically.

TML's focus in the interim is to further improve upon the profitability in this space amidst its proven capabilities across powertrains (ICE, CNG, Electric, Hydrogen). On EV's, it plans to strengthen its leadership position in E-PV space & is also a prominent player supplying E-buses. It is committed to new product launches across powertrains.

2. JLR: volumes to improve in H2FY25, modest growth over medium term:

With indigenous working on the product side, cost initiatives and consequent lowering of breakeven levels, JLR has achieved an impressive turnaround. In FY24, it reported record £29 billion of sales, ~16% as EBITDA margins, ~£ 2.3 billion as FCF generation. It has reduced its net debt from ~£3 billion to ~£1.2 billion as of H1FY25. With focus on profitability, it has retained its guidance to be net debt free in FY25E. H1FY25 volumes were subdued at the company as already guided and with supply chain now restored it expects to stage healthy recovery in H2FY25. However, over medium term, volume growth at JLR is expected to be modest amidst muted global demand prospects.

The auto player is set to split in the ratio of 1:2. 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.