2 Tata Group Stocks To Buy As Suggested By IIFL Securities

Tata Motors Ltd and Tata Steel Ltd have both received a buy call from brokerage house IIFL Securities. Tata Motors is a large-cap company with a market capitalization of Rs 163,753.03 Cr. It is a significant automobile producer of automobiles, utility vehicles, trucks, buses, and defence vehicles. The stock hit a 52-week high of Rs 536.70 on November 17th, 2021, and a 52-week low of Rs 268.45 on August 24th, 2021. It is now trading at a market price of Rs 488.05 on the NSE. Tata Steel is a large-cap company with a market capitalization of Rs 145,461.41 crore and is one of India's top steel manufacturers. On the 16th of August 2021, the stock reached a 52-week high of Rs 1,534.50, and on the 19th of February 2021, it reached a 52-week low of Rs 655.95. On the NSE, the stock is now trading at a market price of Rs 1,184.00.

Buy Tata Motors For A Target Price of Rs. 595

As per the brokerage, Tata Motors' consolidated Ebitda came in at 6% better than our subdued estimates. Although Jaguar Land Rover's (JLR) volume ramp-up was slower than expected due to chip shortage, ASP and margins reflected a rich mix, as the company prioritised profitable models

IIFL Securities has claimed that "JLR's production jumped to 72,000, more than 40% QoQ from a low base of 51,000. Ebitda came in 20% above our estimate, as the rich mix pushed up ASP 13% QoQ and Ebitda margin 12.0%QoQ. The India PV business has seen a significant turnaround with improvement in market share and profitability. We expect PV margins to further improve from current levels. The CV business is beaten down, in terms of industry volume cycle as well as margins. Management is hopeful of a positive volume trajectory, while also guiding to margin improvement as input costs are plateauing and price hikes are coming with a lag."

Buy Tata Steel For A Target Price of Rs. 1380

According to the brokerage "Healthy profitability to sustain in 2H: 2Q Ebitda/t of US$209 should see further improvement in 3Q, aided by EUR50/t increase in prices (NSR increase to be lower due to adverse mix from lower auto) and EUR30/t reduction in iron-ore prices which would offset the EUR55/t increase in coal costs and sharp increase in other energy costs in Europe."

Domestic demand is expected to improve in 2HFY22, as issues pertaining to chip shortages and the monsoon which impacted 2Q recede. During 4Q '22, management expects to see further gains from the repricing of annual contracts. Normalisation of auto volumes gradually would be a medium-term trigger, the brokerage has said.

IIFL Securities has also highlighted that "Opening up of the US market for exports should also drive incremental revenues, given the much higher prices. The company intends to ramp-up exports to ~1mtpa run-rate (currently 0.5mtpa) over the near term."

Disclaimer

The stocks have been picked from the brokerage report of IIFL Securities. 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.