Tata Motors recently hosted its analysts call after a strong performance in the financial year 2024. The brokerage firms mostly remain divided on the Jhunjhunwala owned Tata Group's multibagger stock as they see a strong show to continue amid headwinds for the automaker company.
The management of Tata Motors shared insights and plans on becoming net debt free plans, proposed demerger of the passenger vehicles (PV) and commercial vehicles (CV) business, maintaining strong margins, free cash flow (FCF) along with strategies for electric vehicles (EVs) and local markets.
Tata Motors hosted its investor meet highlighting future strategy for domestic businesses. In the PV/EV business, it plans to launch 5-6 new models over next 2 years across alternate powertrains. Investments in the EV business are expected to be Rs 16,000-18,000 crore over next 6 years, towards developing new products, powertrain, regulatory changes, said JM Financial.
Tata Motors targets 200 basis points market share gain in the PV segment by FY26 led by these launches. In respect of CV business, industry is expected to grow by single-digit during FY25. Net-cash position in domestic business drives comfort, it added with a 'buy' rating and a target price of Rs 1,200. JM added that any slowdown in key global markets remains a monitorable.
Shares of Tata Motors surged more than 2.31 per cent on Wednesday, commanding a total market capitalization of more than Rs 3.35 lakh crore. The stock had settled at Rs 987.10 in the previous trading session on Tuesday.
Management highlighted its target of achieving net auto debt free status at the consolidated level by FY25, a sharper focus on CV and PV business strategy with the demerger, market share gains in PV and CV segments and maintain double-digit Ebitda margin in PV and CV businesses, said Kotak Institutional Equities.
Overall, we expect the FY2025-26E performance to remain healthy, led by steady JLR business performance, driven by an improvement in mix, market share gain in the PV and CV segments and a net cash balance sheet by FY2025E, it added with an 'add' rating and a fair value of Rs 1,100 on the stock.
Shares of Tata Motors have delivered Multibagger returns to the investors. From its covid-19 lows around Rs 65, the stock has zoomed more than 1,450 per cent so far. The stock has gained about 30 per cent in the year so far, while it is up 80 per cent in the last one year.
However, Motilal Oswal Financial Services sees that there are clear headwinds ahead that could hurt its performance, especially at JLR, despite the Tata Motors delivering an extremely robust performance across its key segments in FY24. The brokerage remains 'neutral' on the stock with a target price of Rs 955.
Season investor Rekha Rakesh Jhunjhunwala owned 4,28,00,000 equity shares, or 1.28 per cent, in Tata Motors as on March 31, 2024. Her stake in the company is currently valued at Rs 4,322.80 crore as of Wednesday.
Management reiterated their targets for the India CV and PV business. Over the next few years, and PV business FCF to turn positive by FY30. We are slightly raising FY25E Ebitda by 2 per cent, factoring in better realisation/margins, but FY26E Ebitda stays unchanged, said Nuvama Institutional Equities.
We are building in moderate revenue and Ebitda CAGR of 9 per cent and 13 per cent over FY24–26E versus 21 per cent and 25 per cent over FY21–24, respectively. It retained ‘reduce’ rating on the stock with a target price of Rs 940.
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