September 28, 2022

Rakesh Jhunjhunwala-owned Tata Motors’ share value has rallied 48% to date this month to commerce at Rs 501 apiece and will lengthen its huge up-move, in keeping with international brokerage agency Jefferies. Analysts have elevated the goal value for Tata Motors to Rs 625 per share from Rs 565 apiece earlier, on enhancing India franchise, early management in EVs in India, and JLR focus returning to the higher-margin Land Rover model. Huge Bull Rakesh Jhunjhunwala owned 3.67 crore fairness shares of Tata Motors on the finish of September, in keeping with the corporate’s shareholding sample accessible on the inventory change web site.

Extra market share good points on the anvil

Jefferies has taken be aware of Tata Motors latest car launch — Tata Punch. The brand new car is predicted to speed up the market shift. “Availability of lower-priced well-styled SUVs resembling Tata’s Punch ought to speed up the shift from the premium hatchback and small sedan segments, which type about 35% of business volumes,” they mentioned. Tata Motors noticed its market share drop to five% within the monetary yr 2019-20. “Its new SUVfocussed portfolio, improved product styling, and model positioning round security have fueled a powerful turnaround, with market share recovering to 11% in 1HFY22, and we see additional upside potential from Punch,” Jefferies added.

Goal value situations

Below the Base Case situation, Jefferies has a goal value of Rs 625 per share on Tata Motors primarily based on 6.0x Sep’23E P/B for standalone, 2.5x Sep’23E EV/EBITDA for JLR, and 50% low cost to transaction worth in stake sale to TPG for India EV enterprise. Analysts have estimated standalone volumes to develop 42%/21%/11% in FY22/ FY23/FY24 underneath the bottom case situation. The bottom case sees 24.7% upside potential.

Within the draw back situation, the brokerage agency expects standalone volumes to develop 37%/16%/6% in FY22/ FY23/FY24; margin ~100bps beneath base case. A goal value of Rs 415 per share is estimated, implying 17% draw back.

The upside situation for Tata Motors estimates standalone volumes to develop 47%/26%/16% in FY22/23/FY24 with margins ~100bps above base case. Whereas for Jaguar Land Rover volumes are anticipated to fall 2% in FY22E however develop 37%/12% in FY23E/FY24E. A goal value of Rs 800 per share has been set for this situation, implying a 59% upside.

Rakesh Jhunjhunwala’s stake

Rakesh Jhunjhunwala had bought Tata Motors shares final yr in September when the inventory had been battered down by the covid-19 aided sell-off in international equities. The ace buyers had then trimmed his holding in Tata Motors, reserving partial income within the first quarter of this monetary yr. With 3.67 crore fairness shares nonetheless in his portfolio, Rakesh Jhunjhunwala owns a 1.1% stake within the firm, valued at Rs 1,841 crore in the present day. 

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