Active Stocks
Thu Apr 25 2024 14:38:01
  1. Kotak Mahindra Bank share price
  2. 1,630.95 -11.51%
  1. Tata Steel share price
  2. 166.90 0.85%
  1. State Bank Of India share price
  2. 811.80 4.99%
  1. Axis Bank share price
  2. 1,127.50 6.00%
  1. Power Grid Corporation Of India share price
  2. 294.15 1.24%
Business News/ Markets / Stock Markets/  Tata Motors shares: Key catalysts that may drive stock over next 12 months, as per Motilal Oswal
BackBack

Tata Motors shares: Key catalysts that may drive stock over next 12 months, as per Motilal Oswal

Tata Motors should witness a gradual recovery as supply-side issues ease (for JLR), said brokerage Motilal Oswal

An employee prepares to attach a wheel to a Range Rover sports utility vehicle (SUV) on the production line at Tata Motors Ltd.'s Jaguar Land Rover vehicle manufacturing plant (Bloomberg)Premium
An employee prepares to attach a wheel to a Range Rover sports utility vehicle (SUV) on the production line at Tata Motors Ltd.'s Jaguar Land Rover vehicle manufacturing plant (Bloomberg)

Improving chip supplies globally, along with a very strong order book, should bode well for JLR, as per brokerage Motilal Oswal, which believes that this would be supplemented by a substantially favorable mix in favor of its three most profitable products (74% of order book), as well as a favourable mix and operating leverage benefit. 

“In turn, improving supplies would further aid the release of working capital and enable substantial net debt reduction by FY25E (to <GBP1b from GBP3.85b in Dec-22). A strong recovery in JLR, sustained resurgence of the India business, and a possible monetization of its stake in Tata Technologies (possible value of INR25-47/share for TTMT) are the key catalysts for the Tata Motors shares over next 12 months," said the brokerage while maintaining Buy rating on the Tata Group stock with a target price of 540 per share.

Tata Motors should witness a gradual recovery as supply-side issues ease (for JLR) and commodity headwinds stabilize (for the India business). It will benefit from: a) a macro recovery in India, b) company-specific volume/margin drivers, and c) a sharp improvement in FCF and leverage in both JLR as well as the India business, as per the brokerage.

"Tata Technologies, a subsidiary of TTMT, is a global leader in the ER&D segment with focus on the automotive industry. Tata Technologies is evaluating a possible IPO, which will help TTMT monetize part of its stake. This possible IPO along with the receipt of consideration of EV deal with TPG will support FCF generation from the India business to attain near debt zero in the India business," added Motilal Oswal.

With no major new launches lined up for Tata Motors and some of its key competitors benefitting from a favorable product lifecycle, the brokerage house believes that the company's market share has peaked out for the next 12-15 months. It would be launching Curvv (midsized SUV expected in CY24), Harrier EV (CY24), Sierra EV (e-SUV in CY25), and Avinya (first born EV in CY25).

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 20 Feb 2023, 03:25 PM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started