Seasoned Dalal Street investor Rekha Rakesh Jhunjhunwala has signalled a potential exit from Tata Group's bluechip stock after holding it for as many as four years. The Tata Group counter has delivered multibagger to investors over the last few years and has zoomed nearly 800 per cent during Jhunjhunwala's holding period.
The stock is Tata Motors, the homegrown auto major which has been in the limelight. Even on Tuesday the stock was in action, witnessing intense selling pressure. The stock dropped 4 per cent to Rs 893.90 on Tuesday, against its close at Rs 928.10 on Monday. The total market capitalization of the company slipped below Rs 3.3 lakh crore mark.
Rekha Jhunjhunwala's name was missing from the key shareholder's list of the company as of September 30, 2024 quarter. However, as per the filing given by the company on September 1, 2024, the wife of late Rakesh Jhunjhunwala owned 4,10,29,000 equity shares, or 1.11 per cent in the Tata Group company.
Legendary investor Rakesh Radheshyam Jhunjhunwala picked up 4,00,00,000 equity shares in Tata Motors in September 2020 quarter, when his name was first seen in key shareholder's list. Following his demise, Rekha Jhunjhunwala continued to hold this stake but her name was not seen in the latest corporate filing, signaling her potential exit in the auto major.
All the listed entities need to necessarily file the shareholding pattern of the company at the end of every quarter. The list needs to exclusively name the specific shareholders, who own a significant stake in the company, which is at least one per cent stake in the given company. If shareholding slips below one per cent, then it needs no name of the shareholders.
According to the data from Trendlyne, Rakesh Jhunjhunwala and Associates publicly holds 25 stocks with a net worth of over Rs 47,715.6 crore as per the latest corporate shareholdings filed so far.
Tata Motors said that its subsidiary Jaguar Land Rover (JLR) reported a 3 per cent decline in retail sales, with 1,03,108 units sold during the second quarter of FY25 compared to the same period last year. Retail sales for the first half of the fiscal year reached 2,14,288 units, up 3 per cent year-on-year,
Production in Q2 FY25 was limited to 86,000 units, a 7 per cent decline compared to 93,000 units in the same period last year. The company attributed this drop to aluminum supply disruptions that occurred in Q1 FY25. This muted performance led to correction in the stock.
Commenting on Tata Motors, analysts said the JLR commentary around volume rebound is encouraging but divergent from luxury peers, who have recently downgraded their outlooks, citing demand weakness in China. However, the company is optimistic for the recovery in the second half of FY25.
Motilal Oswal expects JLR margins to remain under pressure over FY24-FY26, given the rising cost pressure as it invests in demand generation; normalizing mix; and EV ramp-up, which is likely to be margin-dilutive. Even in the Indian business, both CV and PV businesses are experiencing moderation in demand. "We have factored in flat margins for the Indian business," it said.
While there is no doubt that Tata Motors delivered an extremely robust performance across its key segments in FY24, the above mentioned headwinds could hurt its performance going forward, it said. "We reiterate 'neutral' with our June 26E SOTP-based target price of Rs 990," Motilal added.
Emkay Global has reaffirmed its positive outlook on the stock, given the structural improvements across operational parameters at JLR -- it is on track for becoming net-debt free in FY25E. he brokerage is positive on Tata Motors' healthy India outlook, amid impending cyclical recovery and strong margin uptick. It has reiterated 'buy' rating with unchanged target price of Rs 1,175.