Jefferies recently gave 19 stock ideas for December. It is bullish on the shares of Tata motors. Jefferies said that it likes Tata Motors based on the cyclical recovery and improving franchise in India, early leadership in India EVs, and JLR’s focus on returning to higher margin Land Rover models.
It noted that Indian truck and PV (passenger vehicle) demand is recovering from the worst downturn in decades, as it forecast a strong 17 per cent volume CAGR over FY22-25E. It said that Tata has made a strong comeback in PVs with market share rising from 5 per cent in FY20 to 14% in 1HFY23, led by a strong SUV focus, better products and an improved brand positioning.
Further, the auto major has taken an early leadership in EVs in India’s passenger vehicle space with an 80 per cent market share. While a global recession is a risk to JLR, the company is in a strong product cycle with the recent launches of the new-gen Range Rover and Range Rover Sport. By FY25, Jefferies sees Tata’s Ebitda becoming 2.6 times of FY22 and EPS exceeding the past peak.
Tata Motors has been on a losing streak for the past six days. Its shares closed at ₹ 418.00, down 0.50% on Thursday. The stock tumbled 15.38% in the past year as compared to a 6.24% rise in the benchmark Nifty 50 and a 6.40% increase in the Sensex.
In another development, the auto major is looking to raise passenger vehicle prices from next month in order to make its model range compliant with stricter emission norms which start from April 1 next year.
Jefferies has given a target of ₹ 540 on the shares of Tata Motors. This translates to an upside of 29.18% as compared to its current share price.
Written by Simran Bafna
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