Multibagger Tata Group Stock Fell 16% In 1-Year, Brokerage Sees 32% Surge In Shares: Buy

Leading brokerage firm, Chola Wealth has assigned buy call to Tata Group stock, Tata Motors Ltd with a target price of Rs 520 apiece. The current market price of the stock is Rs 395 apiece. If you buy shares of Tata Motors Ltd now, you can get 32% potential return in 2023. The company has a market capitalisation of Rs 1,31,423.45 crore.

Management is expecting full reversal of this 80bps gross margin impact along with further improvement in gross margin led by input commodity cost reduction and price hikes. Demand outlook remains steady across PVs/CVs, though the pace of growth. Check key takeaways below:

1. Tata Motors Ltd Stock Performance & Return

The current market price of the stock is Rs 395 apiece with intraday gain of 2.70%. The stock's 52-week high is Rs 528 apiece and 52-week low is Rs 366 apiece, respectively. The shares have declined 16% in last 1-year and gave return of 123% in last 3-years. The stock has declined 6% in last 5-years.

2. PV Sales

Tata Motors scaled new highs with PV sales of 142,325 units during the quarter, recording a growth of ~70% versus Q2FY22 with SUV sales contributing a rich ~66% of the quarterly PV sales. In electric vehicles, the company posted record-making sales of 11,522 units in Q2FY23, registering a growth of 326% versus Q2 FY22.

The recent festive season (Navratri to Dhanteras) saw 43% growth in retail sales over the previous year's festive season sales. The overwhelming customer response received for the Tiago EV, launched towards the end of the quarter, will further accelerate mass adoption of EVs across the country.

3. CV Industry Witnessed Consistency In Demand Across Segments

Sharp focus on retail resulted in retail sales outperforming wholesale by 1.3% during Q2 FY23. TML launched an efficient range of smart trucks in MHCV and ILCV segments, as well as best-in-class pickups, raising the benchmarks for safety, comfort, load carrying capacity while reducing their total cost of ownership.

The management aims to drive the business on "Demand Pull" by focusing on customer connect, product innovation, service quality and thematic brand activations thereby improving customer affinity for our brands, step up registration market shares sustainably, and improve realisations and profitability.

4. Valuations

According to Chola Wealth, "TTMT should witness a gradual recovery as supply-side issues ease (for JLR) and commodity headwinds stabilize (for the India business). It will benefit from: a) macro recovery, b) company-specific volume and margin drivers, and c) a sharp improvement in FCF and leverage in both JLR as well as the India business. The stock trades at 16.8x FY24E consolidate P/E and 4.2x EV/EBITDA ratio. We maintain our Buy rating, with a TP of ~INR520/share (Jun'24E based SoTP)."

5. About Tata Motors Ltd

Tata Motors Limited, a USD 35 billion organisation, is a leading automobile manufacturer with a portfolio that includes a wide range of cars, utility vehicles, trucks, buses and defence vehicles. Our marque can be found on and off-road in over 125 countries around the globe.

Disclaimer

The stock has been picked from the brokerage report of Chola Wealth. 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 check with certified experts before taking any investment decision.