Mid Cap, Large Cap Tata Stocks To Buy Showing 34-37% Upside Potential: Top Brokerage Firms

Two leading brokerage firms ICICI Securities and KR Choksey pick two quality Tata Group Stocks, Tata Motors Ltd. and Tata Elxsi Ltd., with a "Buy" rating. The brokerage firms are bullish on stocks, sees 34-37% potential upside in the share price of the stock in the near term. Stocks are midcap and large-cap Tata stocks. Here we have highlighted stocks' key takeaways:

Tata Motors Ltd. (TTMT)

ICICI Securities assigned a "buy" on the stock of TTMT with a target price of Rs 608 apiece. When stock is purchased at the current market price, it would likely return up to 37% from the current level, considering the given target price. It is the Auto Sector large-cap stock of Tata Group having a market capitalisation of Rs 1,39,178 crore.

The stock last traded on NSE at Rs 445.60 apiece, up 6.34% as compared to its previous close of Rs 419.05 apiece. Its 52-week high is Rs 520 apiece and its 52-week low is Rs 366.20 apiece, respectively. It has given a decent 6.99% positive return in a week, and 4.39% in 3 months, respectively. However, in the past 1 year, it has fallen 18.39%. In the last 3 years, it surged giving the maximum 110.82% positive return. It fell 5.3% in the last 5 years.

Tata Motors - ICICI Securities

ICICI Securities said, "Tata Motors' (TTMT) Q3FY23 performance exceeded our expectations in JLR and CV businesses, but the India PV business fell below estimates. JLR's ASP continued to surge and touched a record GBP75k/unit led by improving mix of RR/RR Sport / Defender. This resulted in ~12% EBITDAM, up 160bps QoQ, with wholesales of 80k units in Q3FY23. Assisted by forex gains, improved operational performance and partial working capital reversal, JLR reported GBP490mn of FCF during the quarter and we believe it is on course to end the year with a positive FCF of GBP100mn. Production outlook for JLR remains at 80k units in Q4 with an improving bias over 3Q levels. For India CVs, EBITDAM expanded by 340bps QoQ to 8.4%, which is attributable to falling commodity costs and disciplined discounting."
It added, "Price hikes needed to pass on costs related to RDE norms and the risk of another round of commodity inflation would pose a challenge to CV margin in H1FY24, we believe. India PV business EBITDAM (adjusted for 80bps one-off benefit) improved by a mere 80bps QoQ. Thus, with receding supply-related headwinds for JLR, we believe the entity is likely to sustain 12% EBITDAM in FY24E and deliver FCF of GBP1.5bn. We are not changing our estimates for any of the businesses and maintain BUY with an SoTPbased target price of Rs608 (earlier: Rs571), implying 12x/2x FY24E EV/EBITDA for India/JLR respectively."

 

Tata Elxsi Ltd.

KR Choksey has assigned a "buy" on the stock of Tata Elxsi with a market capitalisation of Rs 8,884 apiece implying 34% upside from its current level. The stock's current market price on NSE is Rs 6,664.35 apiece, 1.02% up from its previous close. Its 52-week low is Rs 5,709.05 apiece and its 52-week high is Rs 10,760 apiece, respectively.

In a week it has given 4.48% and 3.62% in 1 month, respectively. It fell 5.11% in 3 months and 4.445 in 1 year, respectively. The stock has given a robust 606.91% return in 3 years and 512.7% in the past 5 years, respectively. Tata Elxsi is Tata Group's mid cap stock having a market capitalisation of Rs 41,085.01 crore. It operates in the IT Software sector.

Tata Elxsi - KR Choksey

According to KR Choksey, TELX is currently trading at a valuation with a P/E multiple of 58.63x / 47.52x on FY23E/FY24E earnings. "We expect strong deal momentum across verticals, the addition of new clients from newer geographies, a higher focus on IDV especially in design-led digital projects, and a multi-year tailwind in EPD and hence we are assigning a P/E multiple of 64x to the FY24 estimated EPS of INR 138.8 to arrive at a target price of INR 8,884 per share, an upside of around 35% over the CMP. Accordingly, we maintain our rating to a "BUY" to the stock," the brokerage has said.

Disclaimer

The stocks have been picked from the brokerage reports. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.