The share price of Tata Motors, owned by Rakesh Jhunjhunwala, has risen 48% so far this month to trade at Rs 501 apiece and could extend its massive rise, according to global brokerage firm Jefferies . Analysts raised Tata Motors’ target price to Rs 625 per share from Rs 565 each earlier, on improving the Indian franchise, early leadership in electric vehicles in India and JLR’s return to the Land Rover brand at higher margin. Big Bull Rakesh Jhunjhunwala held 3.67 crore of Tata Motors shares at the end of September, according to the company’s stock ownership scheme available on the exchange’s website.
More market share gains on the anvil
Jefferies took note of the launch of Tata Motors’ latest vehicle – Tata Punch. The new vehicle is expected to accelerate the market change. âThe availability of well-styled, low-cost SUVs such as the Tata Punch is expected to accelerate the shift in the premium sedan and small sedan segments, which account for about 35% of industry volumes,â they said. Tata Motors saw its market share drop to 5% in the 2019-20 fiscal year. “Its new SUV-focused portfolio, improved product style and brand positioning around safety led to a strong turnaround, with market share reaching 11% in 1HFY22, and we see further upside potential. of Punch, âadded Jefferies.
Target price scenarios
In the baseline scenario, Jefferies has a target price of Rs 625 per share on Tata Motors based on 6.0x Sep’23E P / B for standalone, 2.5x Sep’23E EV / EBITDA for JLR, and 50% of discount on the value of the transaction sale in participation to TPG for the EV business in India. Analysts have estimated that stand-alone volumes will increase by 42% / 21% / 11% in FY 22/23/24 in the baseline scenario. The baseline scenario foresees an upside potential of 24.7%.
In the downside scenario, the brokerage firm expects stand-alone volumes to increase 37% / 16% / 6% in FY 22 / FY 23 / FY 24; margin ~ 100bps below the baseline. A target price of Rs 415 per share is estimated, which implies a decrease of 17%.
Tata Motors’ bullish scenario estimates that autonomous volumes will increase by 47% / 26% / 16% in FY22 / 23 / FY24 with margins of around 100bp above the baseline. While for Jaguar Land Rover, volumes are expected to drop 2% in FY 22E but increase 37% / 12% in FY 23E / FY24E. A target price of Rs 800 per share has been set for this scenario, implying an increase of 59%.
The participation of Rakesh Jhunjhunwala
Rakesh Jhunjhunwala bought shares of Tata Motors last year in September when the stock was shot down by the sale of covid-19 of global stocks. The investor ace then reduced its stake in Tata Motors, making partial profits in the first quarter of this fiscal year. With 3.67 crore of shares still in his portfolio, Rakesh Jhunjhunwala owns a 1.1% stake in the company, valued at Rs 1,841 crore today.