Home / Markets / Stock Markets /  Rakesh Jhunjhunwala hikes stake in this Tata group stock. 'Still time to buy', says Jefferies

Indian truck and PV (passenger vehicle) demand is recovering from the worst slowdown in decades, and Tata Motors is gaining share, as per Jefferies. It believes that that auto stock is in the early phase of a multi-year turnaround led by confluence of improved strategy and cyclical recovery. 

JLR has been severely impacted by chip shortages but pressures are easing. “JLR is improving sequentially as chip shortages ease, and ramp-up of next-gen RR/RR-Sport should provide a boost. An early lead in India EVs offers big option value. Tata is its top auto stock pick and its India business forms 67% of its 625 price target," the note stated.

Jefferies Buy rating on the multibagger stock comes with a target price of 625 per share as it believes that it is still time to buy Tata Motors shares with potential upside scenario target price of 770 and downside scenario of 415.

"Tata reworked its strategy under a new CV (commercial vehicle) business head starting 2017, focusing on sales engagement, dealer profitability and servicing. Tata's truck share has risen to 55% in 9MFY22, a 6-year-high. Truck demand is improving from a severe downturn, and we expect 22% industry CAGR over FY22-24 with Tata better placed in this cycle," the note added.

In October last year, The Tata Group's auto arm had said that TPG Rise Climate fund will lead investment in the automaker's new company that will house its passenger electric vehicle business.

Tata has taken an early lead though with electric vehicles (EVs) contributing 6% of its India PV volumes. It intends to expand its portfolio from 2 EVs presently to 10 by FY26, and the recent investment by TPG provides it the balance sheet strength to drive electrification, believes Jefferies.

As per the BSE shareholding pattern, ace investor Rakesh Jhunjhunwala's stake in Tata Motors has increased to 1.18% as of December-end quarter.

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

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