Jhunjhunwala portfolio stock Tata Motors has offered blockbuster returns to investors in the 20 years, rising by a massive 1,244% over this period. If an investor had put in Rs 10,000 in this Tata group stock in August 2003, it would have swelled to around Rs 1.34 lakh, according to calculations.
Tata Motors stock has seen strong growth, especially in the last five to ten years, when the automaker transformed itself into a go-to option for Indian car buyers, with a series of launches in the affordable, luxury, and EV segments. In the last five years, the stock price has risen by more than 130%.
In the first quarter of FY24, Tata Motors reported strong profitability, driven by robust demand for luxury cars and continued growth in the CV and PV segments. Production has increased as supply constraints have eased. Its net profit of Rs 3,203 crore was higher-than-expected, which came against a loss of Rs 5,007 crore a year ago. Consolidated revenue from operations increased by 42% YoY to Rs 1.02 lakh crore.
Tata Motors' passenger vehicle segment reported an 11% growth in revenue, driven by improved pricing. However, the operating margin dipped 80 bps to 5.3% due to a higher mix of electric vehicles and higher fixed expenses. Domestic wholesale sales grew 7.6% on year in Q1FY24, and retail sales grew 6%.
Tata Motors stock has a PE TTM of 18.9, low in the industry. It has a 1-year beta of 1.11, implying high volatility. Tata Motors' Return on Equity (ROE) for the last financial year was 5.3%, less than 10%, indicating an inefficient use of shareholder's capital to generate profit, according to Trendlyne data.
According to share market analysts, Tata Motors' wholly-owned subsidiary Jaguar Land Rover (JLR's) robust order backlog, rising demand, awareness of electric vehicles (EVs), and favourable industry trends bode well for Tata Motors. Several brokerages have a buy call Tata Motors shares with a target price of up to Rs 785.
Tata Motors shares are currently trading at Rs 604, up over 53% so far this year. Brokerage firm Geojit Financial Services has upgraded Tata Motors stocks to 'Buy' rating with a revised target price of Rs 737.
Emkay Global has upgraded Tata Motors' FY24E/FY25E consolidated EPS by 84%/45%, reflecting sustained higher margins at JLR. The brokerage maintained a 'buy' call on the stock with a target price of Rs 750 per share.
Brokerage firm Motilal Oswal has Tata Motors as one of its fundamental stock picks with a price target of Rs 750. According to Motilal Oswal analyst, Tata Motors should witness a healthy recovery as supply-side issues ease (for JLR), along with a better mix, lower discounts and operating leverage. It will benefit from the CV uptrend and stable growth in PVs; Company-specific volume/margin drivers, and Sharp improvement in free cash flow (FCF) as well as a reduction in net debt.
Nuvama Institutional Equities has upped its target on Tata Motors stock to Rs 785, up from Rs 720 earlier, factoring in increase in estimates and reduction in share capital by 4% owing to conversion of DVR shares into ordinary shares.
Jefferies has maintained a 'Buy' on Tata Motors stock with a target price of Rs 800 per share. CLSA sees the stock at Rs 780, while Morgan Stanley pegs it at Rs 711 per share.
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