Rakesh Jhunjhunwala-owned Tata Motors share price has soared a whopping 24% in the last three trading sessions and continues to move higher today. The company is a play on global luxury vehicles as well as domestic passenger and commercial vehicles. Both domestic, as well as foreign brokerage firms, expect Tata Motors stock to outperform and have a bullish view due to robust volumes and market share gain in passenger and commercial vehicle space. Big Bull Rakesh Jhunjhunwala bought shares of Tata Motors when the stock was beaten down amid the pandemic. The ace investor owned 3.77 crore equity shares or a 1.14% stake in the company at the end of June this year. Tata Motors share price was up 2% on Tuesday trading at Rs 422 per share.
Tata Motors stock talk: Analyst ratings, target share price
ICICI Direct – Buy
Target price – Rs 450
After a sharp underperformance for years, analysts now believe Tata Motors is playing catch-up with the Nifty Auto index. “Retaining our forward estimates, we now value Tata Motors at a revised target price of Rs 450 on SOTP basis (15x, 3.3x FY23E EV/EBITDA in India, JLR businesses, respectively). We revise upwards our target multiples for India business amid continued outperformance at Tata Motors India and are in line with its peers,” ICICI Direct said. The brokerage firm expects a healthy 20.9% revenue CAGR over till the financial year 2022-23 backed by 17% volume CAGR.
The India unit of Tata Motors has reported strong volumes in the July-September quarter, up 49% on-quarter basis. Commercial vehicle volume for the second quarter of this fiscal year grew 73% from the previous quarter. Meanwhile, the India PV business posted decade-high quarterly sales of 84,000 units despite a semiconductor shortage.
Morgan Stanley – Overweight
Target price – Rs 448
Analysts at Morgan Stanley have upgraded Tata Motors target price to Rs 448 per share from Rs 298 apiece earlier. The brokerage firm believes Tata Motors could benefit as India’s autocycle emerges from multi-year lows. In a bull-case scenario, Morgan Stanley estimates Tata Motors’ CV and PV business revenues to grow at a CAGR of 30% and 45%, respectively. Here the target price is set at Rs 635 apiece. “Strong EBIT CAGR, ROE expansion, an emerging autos 2.0 strategy, 140% underperformance vs. Nifty over 5 years, ~30% above consensus FY23 EPS and 8.5xFY23E P/E make risk-reward attractive,” they added.
Jaguar Land Rover has faced issues with a shortage of semiconductors which is likely to hit EBIT margins and increase cash outflow, said Morgan Stanley. However, they added that these risks are now well understood by the street and are likely factored into the share price.
Big Bull earns Rs 324 crore from Tata Motors
Rakesh Jhunjhunwala bought 4 crore equity shares of Tata Motors in September last year. The big bull has since trimmed his stake in the stock but continues to hold a significant chunk of the initial investment. Assuming that Rakesh Jhunjhunwala continues to hold 3.77 crore shares of Tata Motors, the Big Bull has made a massive Rs 324 crore in just three trading sessions from the stock.