Tata Motors share price surged as much as 20% to Rs 502 apiece on BSE on Wednesday, after Rakesh Jhunjhunwala's portfolio firm said to raise Rs 7500 crore from TPG’s Rise Climate Fund and Abu Dhabi’s ADQ.
Tata Motors share price surged as much as 20 per cent to Rs 502 apiece on BSE on Wednesday, after Rakesh Jhunjhunwala’s portfolio firm said to raise Rs 7500 crore ($994 million) from private equity firm TPG’s Rise Climate Fund and Abu Dhabi’s ADQ to expand its passenger electric mobility business. The stock has no circuit limits, as it trades in the futures and option (F&O) segment. Analysts say that this report came as a bonus for Tata Motors as its share price was already soaring on account of robust global wholesale numbers. The stock is likely to rally 20 per cent more to Rs 600 in next few quarters. “Technically, all indicators are showing a bullish trend in Tata Motors. It may touch the level of 520-550 in near term,” Ravi Singh, VP & Head of Research, Share India Securities, told Financial Express Online.
Rakesh Jhunjhunwala owned 3.77 crore equity shares or a 1.14 per cent stake in the company at the end of June quarter this year. In less than one year, Tata Motors stock price rallied nearly 300 per cent, rising from Rs 126 per share to over Rs 500 level, quadrupling investors’ money. “TPG investment in the EV segment, strong future potential in the EV space, positive brokerage reports and ultra-positive market sentiment has led to a huge rally in Tata Motors in the past week,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told Financial Express Online. Ramachandran advised that technically, the stock is very overbought and investors should book profits in their buy positions at current levels.
Tata will form a separate electric mobility unit in which TPG and ADQ will get between 11% and 15% share against compulsorily convertible shares, valuing the new entity at about $9.1 billion. Analysts say that this entire deal might help its peer company Tata Power too in the long run, due to its presence in EV charging stations which will help the overall ecosystem for EV space in India. “This rally may continue in the long term and will help Tata Motors in both passenger and commercial vehicle space. On the current valuations front, Tata Motors is looking attractive and the stock may cross Rs 600-mark in next few quarters and it is worth holding for mid to long term,” Harsh Patidar, Auto Analyst at CapitalVia Global Research, told Financial Express Online.
Tata Motors said that the fund will be used to partly fund investment of $2 billion (over Rs 16,000 crore) in the next five years by a new subsidiary of the company for expanding its EV business, including the launching of 10 EV models.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)