Tata Motors share price has plunged over 20 per cent so far this year, underperforming benchmark NSE Nifty 50 which has fallen around 3.5 per cent in 2022. Despite the correction in share price, analysts at Nomura remain bullish on the stock, and see over 30 per cent potential rally going forward on the back of boost from electric vehicle (EV) segment. The brokerage believes that Tata Motors is taking the lead in EVs, and every 1 per cent market share gain in Passenger Vehicles (PVs) has the potential to add Rs 5000 crore to the market cap of the company. Nomura has a buy rating on the stock with a target price of Rs 520, implying up to 32 per cent upside from Monday’s closing price of Rs 393 per share.
The positive outlook on the stock comes after Tata Motors, on 11 October, announced that its newly-launched EV Tiago.ev has received 10,000 bookings since the bookings opened on 10 October. The company has decided to extend the introductory price to an additional 10000 customers for supporting mass electrification adoption. At the time of launch, analysts at Nomura assessed that the Tiago EV is a very strong package and will appeal to a large customer base. They noted that electric PVs in India have not received as much attention so far as e-2Ws have as there is no FAME II subsidy for personal cars. Also, the public charging infrastructure is in its nascent stage.
Tata Motors taking the lead in EVs
However, getting this kind of high demand shows the propensity of customers to own EVs if an attractive package is offered. “While we expect the next 10000 orderbook to be also sold out in a few days, it is also important that Tata Motors follows this up with ample supply,” Nomura said. The brokerage expects Tiago EV to sell 3000-5000 units per month and its overall Tata Motors EV sales to touch 60000 in FY23 and 96000 in FY24. “We maintain our view that TTMT is taking the lead in EVs with a strategy to position them as premium vehicles and yet make them affordable,” Nomura noted.
It is worth noting that Tata Motors plans to have 10 battery-operated EVs by 2025, which implies approximately one EV launch every six months. Analysts believe that the brand is likely to benefit from this strategy, thus helping to gain more market share. “We maintain our view that every 1% market share gain in PVs has the potential to add Rs 50 bn to the market cap of the company. We maintain our Buy rating and SOTP-based TP of Rs 520,” the brokerage said. In the sector, Nomura is also bullish on Mahindra and Mahindra.
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