Tata Motors shares gain 5% despite wider Q2 loss, here's what brokerages say

Shares of Tata Motors rose 5 per cent to hit an intraday high of Rs 509.95 on the Bombay Stock Exchange (BSE) a day after the company posted its earnings for the quarter ended September 2021.
 
Tata Motors reported a consolidated net loss of Rs 4,441.57 crore for the quarter ended September 2021 as against a net loss of Rs 314.45 crore in the year-ago quarter.

The company's net revenue rose 14.7 per cent to Rs 61,379 crore during the quarter.
 
The stock ended 0.43 per cent higher at Rs 487.80 against the previous close of Rs 485. Market capitilisation of the firm rose to Rs 1,61,964.61 crore. The shares stand higher than 20-day, 50-day, 100-day and 200-day moving averages but lower than 5-day moving averages.
 
The large-cap stock has gained 267 per cent in the last one year and has risen 165.5 per cent since the beginning of this year.
 
"We like Tata Motor's continued market share gains in the domestic PV business, CV upcycle and delivery on FCF generation (aim is to be debt-free by FY24E) coupled with structured aggression in EVs. We believe India EVCo value unlock raises its long term right to win in EVs in India and JLR's too could also follow a similar template (of value unlock) as Jaguar turns pure-electric in FY24," ICICI Securities said in a report.
 
The brokerage firm has a 'Buy' rating on the stock and has a target price of Rs 661 per share.
 
According to Prabhudas Lilladher, Tata Motors' consolidated performance largely surprised on all fronts with revenue growing 15 per cent YoY and margin merely contracting (10.1 per cent) 95bps QoQ, protected through cost control measures.
 
"We maintain our positive stance on Tata Motors as (1) PV business to likely gain further market share based on its SUV focused approach, new product
pipeline and EV focused approach (2) CV industry is benefitting from cyclical upturn and volumes will be driven by infra, agricultural and e-com segments (3) new refreshes in Land Rover and strong order book to benefit JLR and drive FCF generation," the research firm said.
 
"We reduce our estimates over FY22-24 to factor in semiconductor shortage and margin contractions. Maintain 'BUY' with a revised SOTP based Sep-23 TP of Rs 648 (vs Rs 592 earlier) at 11.5x EV/EBITDA for standalone operations, 3x EV/EBITDA for JLR," it added.
 
In October 2021, the foreign research house Jefferies maintained its bullish stance on the stock and raised the target price to Rs 625 from Rs 565 per share.
 
Punch is the latest addition to the automaker's popular 'New Forever' range of cars and SUVs. The Mumbai-based auto giant unveiled it on October 4 this year.

The company's stock has been gaining after it said it will raise $1 billion (Rs 7,500 crore) in its passenger electric vehicle (EV) business from TPG Rise Climate at a valuation of up to $9.1 billion.

Tata Motors Ltd (TML) and TPG Rise Climate have entered into a binding agreement whereby TPG Rise Climate, along with its co-investor ADQ, will invest in a subsidiary of Tata Motors that will be newly incorporated. The first round of capital infusion will be completed by March 22 of next year and the entire funds will be infused by end of 2022, Jim Coulter, Managing Partner, TPG Rise Climate and Founding partner of TPG, had said.