Sharekhan is betting on the stocks of Wipro and Tata Motors for good gains. According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services the Market continues to remain in upward trajectory as macroeconomic trends keep improving month-on-month.
Tata Motors: Solid push on electric vehicles
Sharekhan sees a nearly 20% upside on the stock of Tata Motors from the current market price of Rs 507. The firm has set a target price of Rs 610 on the stock.
Private Equity Investors, TPG and ADQ, are investing USD 1 billion (Rs 7,500 crores) in the EV subsidiary of TAMO for a stake of 11-15%, depending upon the revenue thresholds, which is not disclosed.
"The valuation of the Electric Vehicles business is thus pegged at USD 6.7-9.1 billion depending upon the stake. Tata Motors, through its Electric Vehicles subsidiary, plans to launch a total of 10 Electric Vehicles by FY20216 across price points with different body styles and driving ranges, including born-Electric Vehicles platforms in the future. Tata Motors has already launched three Electric Vehicles models," the brokerage has said.
Buy Tata Motors stock for 20% upside
Sharekhan has increased its SOTP based target price to Rs 610 (Rs 430 earlier), driven largely by value unlocking of the EV subsidiary business.
"We believe Tata Motors is taking the right steps towards increasing its focus on the electric vehicles business in India. The funding from external investors would help the company to aggressively develop and launch electric vehicle models. Also, Tata Motors is likely to benefit from the re-rating of valuation multiples driven by improved ESG ratings and its focus on EV technology. Besides the EV business, we expect TAMO to benefit from all its business verticals - JLR, CVs and PVs, except in H1FY22 that would be marred by near-term challenges of supply constraints. H2FY21 saw strong volume growth and better operational efficiencies aided by aggressive product launches, market positioning, product differentiation, cost savings and investments in R&D," the brokerage has said.
Sharekhan has a hold on the stock of Wipro with a price target of Rs 750 on the stock, as against a current market price of Rs 707.
"In Q2FY22, Wipro beat our estimates on all fronts, led by higher-than-expected contribution from the acquisitions (CAPCO and Ampion) and continued strong organic revenue growth. Wipro reported a constant currency (CC) revenue growth of 8.1% q-o-q and 17.8% y-o-y, well ahead of its top-end guidance of 5-7%. EBIT margin too stayed ahead of our expectations despite wage revision, impact from full quarter consolidation of Capco and Ampion, and investments in capability-building. Revenue growth guidance of 2-4% q-o-q for Q3FY2022 was on the expected lines. The management highlighted that the new business strategy, a simplified operating model and broad approach started showing results in terms of continued improvement in revenue growth trajectory and healthy deal wins," the brokerage has said.
The above stocks are picked from the brokerage report of Sharekhan. 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