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Synopsis : Tata Motors has seen its shares soar by 1,450% over four years, with significant investment and expansion plans in place. While some brokerage firms remain optimistic about its future performance, others advise caution due to potential headwinds, particularly in key global markets. The stock's recent performance and ambitious targets reflect a company striving for growth, though investors should weigh expert insights carefully.
Diverging Brokerage Views
Brokerage firms have shown mixed reactions to Tata Motors' stock. Some foresee continued strong performance despite challenges, while others caution about potential headwinds. The company recently held an analysts' call to discuss its robust performance in the financial year 2024 and outline future plans.
Key Insights from Management
During the call, Tata Motors' management shared their vision for becoming net debt-free, the proposed demerger of passenger vehicles (PV) and commercial vehicles (CV) businesses, and strategies for maintaining strong margins and free cash flow (FCF). They also highlighted their focus on electric vehicles (EVs) and local market strategies.
Investment Plans and Market Expansion
Tata Motors hosted an investor meet to discuss future strategies for its domestic businesses. In the PV/EV segment, the company plans to launch 5-6 new models over the next two years across various powertrains. JM Financial noted that Tata Motors is set to invest Rs 16,000-18,000 crore over the next six years in developing new products and powertrains, as well as adapting to regulatory changes. The company aims to gain 200 basis points in market share in the PV segment by FY26.
For the CV segment, Tata Motors expects single-digit industry growth during FY25. With a net-cash position in its domestic business, JM Financial has given the stock a 'buy' rating with a target price of Rs 1,200, though they caution about potential slowdowns in key global markets.
Recent Stock Performance
Shares of Tata Motors surged by more than 2.31% on Wednesday, reaching a market capitalization of over Rs 3.35 lakh crore. The stock had closed at Rs 987.10 in the previous trading session. The company targets achieving a net auto debt-free status by FY25 and aims to maintain double-digit EBITDA margins in both PV and CV businesses, as highlighted by Kotak Institutional Equities. They predict a healthy performance for FY2025-26, driven by steady JLR business performance and market share gains in PV and CV segments, and have rated the stock as 'add' with a fair value of Rs 1,100.
Investor Sentiment and Future Outlook
Tata Motors' shares have provided substantial returns to investors, rising from COVID-19 lows of around Rs 65 to current levels, marking a 1,450% increase. The stock has gained about 30% this year and 80% over the last year. However, Motilal Oswal Financial Services warns of clear headwinds, especially for JLR, and remains 'neutral' on the stock with a target price of Rs 955.
Rekha Rakesh Jhunjhunwala holds 4,28,00,000 equity shares, or 1.28%, in Tata Motors, valued at Rs 4,322.80 crore as of the latest data. Nuvama Institutional Equities also raised FY25E EBITDA estimates slightly but retained a 'reduce' rating with a target price of Rs 940, projecting moderate revenue and EBITDA CAGR of 9% and 13% over FY24-26.
Conclusion
Tata Motors' stock has delivered remarkable returns, but brokerage opinions are divided on its future potential. Investors should consider both the optimistic and cautious outlooks provided by various financial analysts before making any investment decisions.
Disclaimer: We provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
