Tata Motors recently held an analyst call following a successful performance in fiscal year 2024. The brokerage firms are mainly divided on the Jhunjhunwala-owned Tata Group's multibagger stock, as they expect a good performance to continue despite headwinds for the manufacturer.
Tata Motors' management provided insights and plans to become debt-free, including a projected demerger of the passenger vehicles (PV) and commercial vehicles (CV) businesses, maintaining solid margins, free cash flow (FCF), and strategies for electric cars (EVs) and local markets.
Tata Motors held an investor meeting to emphasize its future plan for domestic businesses. In the PV/EV industry, it intends to launch 5-6 new models with various powertrains during the next two years. According to JM Financial, investments in the EV market are estimated to be between Rs 16,000-18,000 crore over the next six years, mostly for the development of new vehicles, powertrains, and regulatory adjustments.
Tata Motors expects to earn 200 basis points of market share in the PV segment by FY26, owing to these launches. In terms of CV business, it is predicted to rise by a single digit in FY25. The net-cash position in domestic company provides comfort, it noted, with a 'buy' rating and a target price of Rs 1,200. JM said that any downturn in key global markets should be monitored.
Tata Motors shares rose more than 2.31 percent on Wednesday, with a total market capitalization of more than Rs 3.35 lakh crore. The stock closed at Rs 987.10 in the previous trading session on Tuesday.
According to Kotak Institutional Equities, management's goals include achieving net auto debt free status at the consolidated level by FY25, focusing more on CV and PV business strategy with the demerger, increasing market share in PV and CV segments, and maintaining double-digit Ebitda margins in PV and CV businesses.
Overall, we estimate the FY2025-26E performance to continue solid, lead by consistent JLR business success, driven by an increase in mix, market share gains in the PV and CV categories, and a net cash balance sheet by FY2025E," it added, assigning the company a 'add' rating and a fair value of Rs 1,100.
Tata Motors shares have generated multibagger returns for investors. Since its covid-19 lows of roughly Rs 65, the stock has risen by more than 1,450 percent. The stock has gained roughly 30% this year, and it is up 80% in the last year.
However, Motilal Oswal Financial Services believes that there are major obstacles ahead that could harm its performance, particularly at JLR, notwithstanding Tata Motors' exceptionally strong performance across its key sectors in FY24. The firm maintains a 'neutral' rating on the company, with a target price of Rs 955.
As of March 31, 2024, investor Rekha Rakesh Jhunjhunwala owned 4,28,00,000 equity shares in Tata Motors, accounting for 1.28 percent. Her share in the company is currently worth Rs 4,322.80 crore as of Wednesday.
Management restated its goals for the India CV and PV businesses. Over the next three years, the PV business's FCF is expected to turn positive by FY30. Nuvama Institutional Equities said it is enhancing FY25E Ebitda by 2% to account for stronger realisation/margins, while FY26E Ebitda would remain constant.
They anticipated a moderate revenue and EBITDA CAGR of 9% and 13% over FY24-26E, compared to 21% and 25% during FY21-24, respectively. It maintained a'reduce' recommendation for the stock, with a target price of Rs 940.
