The shares of Tata Motors were in focus this week after the company said that it will be implementing a price increase of up to 5% on its commercial vehicles starting from April 1, 2023. This is the second time that the company is making such a price hike in four months.
The auto manufacturer said that its decision to increase prices is a result of its efforts to comply with the more stringent BS6 phase II emission norms. It added that the price increase will be applied across the entire range of commercial vehicles, with the exact amount varying according to the individual model and variant.
Brokerage firm Motilal Oswal Financial Services (MOFS) has a buy call on the shares of Tata Motors with a target price of ₹ 540 which translates to an upside of 28% as compared to its share price of ₹ 421.60 apiece.
MOFS said that the company would witness a gradual recovery as supply-side issues ease for JLR and commodity headwinds stabilize for its domestic business. It added that the company will benefit from a macro recovery in India, company-specific volume/ margin drivers and a sharp movement in free cash flows and leverage in JLR as well as the India business.
The auto major is a large-cap company with a market capitalization of ₹ 1,38,184 crores. However, it has a low return on equity of 22.93% and a high debt-to-equity ratio of 5.52.
Tata Motors is a leading global automobile manufacturer and is a part of the prestigious Tata Group. The company offers a wide portfolio of cars, sports utility vehicles, trucks, buses and defence vehicles to the world.
The company posted a total income of ₹ 88,488.59 crores in the October to December quarter of 2022 (Q3FY23), indicating an increase of 22.51% compared to ₹ 72,229.29 crores reported in the corresponding quarter last year. It reported a profit of ₹2,939.78 crores in the latest quarter as compared to a loss of ₹ 1,338.17 in the same quarter last year.
Written by Simran Bafna
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