2 Mega Tata Stocks Are Attractive For Double-Digit Gains; 1 Auto, 1 FMCG Stock To Buy; Check Out New Target

Tata Group Stocks To BUY: Two mega Tata Stocks, trading as large-caps and engaged in the business of auto and FMCG, are an attractive bet for potentially double-digit gains ahead. There are chances of 11% to nearly 26.5% in the short-term tenure. Last week, both the shares corrected significantly with a decline of 5-7%, indicating a buy-on-dips opportunity. Who are they? These two giants are Tata Motors Ltd and Tata Consumer Products Ltd.

Tata Consumer Products Share Price:

During the early trade of Monday, the largecap FMCG stock surged marginally to trade at Rs 1135.65 apiece, with market cap of Rs 1,12,361.61 crore. In the pre-market opening of October 7, Tata Consumer share price dipped by 5.20% to trade at Rs 1072 apiece. Last week, on Friday, the stock closed at Rs 1130.80 apiece, while its weekly performance was down by 5.89% from September 30 to October 4.

Currently, the stock's 52-week high and low is at Rs 1,254.36 apiece and Rs 847.70 apiece. YTD, the stock is up by 6.30%.

This FMCG giant's price-to-equity ratio is at 126.91x, while the return on equity is at 6.48%.

At the latest, Motilal Oswal has recommended buying Tata Consumer for a target price of Rs 1,380 apiece ahead. But the highest target price is of Rs 1,385 set by ICICI Securities, hinting at a potentially 22.5% upside ahead.

In its analysis report, ICICI Securities said, "Our analysis of Tata Starbucks financials over FY14-24 indicate (1) It had revenue CAGR of 29% over FY14-24 and store count CAGR of 26%. The revenue/store has remained flat at ~INR 35mn. (2) The gross margins of Tata Starbucks (TS) and Starbucks Corporation (SBUX) are similar at ~67%. We believe TS can potentially reach >20% EBITDA margin (SBUX EBITDA margin: ~18%) and (3) TS plans to reach 1,000 outlets by FY28 (421 in FY24). The plan appears ambitious, probably triggered by (1) the vacuum caused by the partial exit of Café Coffee Day (though TS is far more premium positioned) and (2) the rise of new chains (Blue Tokai, Third Wave etc). We model the EV of Tata Starbucks at INR 211bn (EBITDA multiple of 24x). In TCPL's SoTP, we attribute INR 91/share for Tata Starbucks."

On the valuation, the brokerage's report said, "We model TCPL to report revenue and PAT CAGRs of 15.8% and 18.9%, respectively over FY24-26E led by improvement in profitability of India Foods and revival in the profitability of international business. We maintain BUY and value the stock at an unchanged TP of INR 1,385."

Tata Consumer Products is home to well-loved brands - Tata Tea, Tetley, Tata Salt, Eight O'Clock Coffee, Himalayan Water and emerging brands like Tata Sampann, Tata Soulfull, Tata Gluco Plus and Tata Water Plus.

Tata Motors Share Price:

In the opening bell, Tata Motors' share jumped by nearly a per cent to trade at Rs 939.45 apiece on BSE, with market cap of Rs 3,45,800.66 crore. In the pre-market opening of October 7, Tata Motors share price traded at Rs 938 apiece, up by 0.8%. Last week, Tata Motors share price stood at Rs 930.70 apiece on Friday, while it declined by 6.65% from September 30-October 4.

The auto giant's 52-week high and low is at Rs 1,179.05 apiece and Rs 613.80 apiece respectively. While its price-to-equity ratio is at 33.73x, and that of return on equity (ROE) is strong at 33.7%. YTD, Tata Motors share price is up by 19%.

At the latest, Emkay Global has upgraded its stance on Tata Motors to BUY from Hold. The target price is set highest at Rs 1,175, hinting at potentially 26.24% upside ahead.

On the valuation, Emkay's note said, "We upgrade TTMT to BUY from Add, keeping our SoTP-based TP unchanged at Rs1,175/sh (incl. roll-over to Sep-26E). TTMT stock price has corrected 16% from its peak, amid outlook downgrade at peer BMW (incl. due to muted China demand, and slowness in domestic CVs/PVs (incl. rising discounts/price cuts."

Further, the brokerage said, "We highlight that: i) for JLR, China is a relatively smaller market (~24% vs ~32% for BMW), while profitability and debt outlook are largely intact; ii) India CV outlook is improving, with margins likely to see strong increase led by healthy fleet operator profitability, sustained pricing discipline; iii) new launches, lower inventory would help outperformance vs a weak PV industry. TTMT's B/S is healthier now, with valuations least demanding among OEMs. We trim FY26E/27E EPS by ~2.5% (5%/11% revenue/PBT CAGR)."

Part of the USD 165 billion Tata Group, Tata Motors, a USD 44 billion organisation, is a leading global automobile manufacturer of cars, utility vehicles, pick-ups, trucks and buses.