Tata Motors Share Price: Tata Motors’ share price touched a fresh 52-week high of Rs 542.45 apiece after gaining more than 1 per cent on the BSE during Monday’s session. This comes after the Tata group signed an outline deal with the Gujarat government last Friday (June 2) to build a lithium-ion cell factory with an investment of about Rs 13,000 crore. The move comes as India is looking to create its own electric vehicle (EV) supply chain.
Tata Motors already has a plant operational at Sanand, and has also acquired the adjoining Ford Motors’ plant. The process of integration of the two plants has begun and may take up to one year to complete, Reuters reported.
According to an official announcement by the Gujarat government, the project is set to commence with an initial investment of Rs 13,000 crores (equivalent to USD 1.8 billion) during its first phase. This endeavour aims to establish a factory with a substantial capacity of 20 gigawatts (GW), furthering the government’s push towards achieving 100 percent EV adoption and reduction in carbon emissions by 50 percent by 2030.
The stock of the automobile major surpassed its previous high of Rs 537.15, touched on May 15, 2023. It was quoting at its highest level since February 2017.
The automobile giant also expects passenger vehicle industry growth to moderate to 5-7 per cent in the current financial year, as compared with 27 per cent sales growth in the last financial year with a dip in pent-up demand, according to a PTI report.
In order to sustain growth, the auto major is looking to introduce new products, including CNG and electric models, while bolstering its existing range with new interventions, Tata Motors Managing Director, Passenger Vehicles and Electric Vehicles, Shailesh Chandra, said in an analyst call.
Tata Motors May Sales
Tata Motors on June 1, 2023, reported 1.62 per cent decline in total sales at 74,973 units in May as compared to the same month last year. The company had posted a total sale of 76,210 units in May 2022, Tata Motors said in a statement.
Sales of passenger electric vehicles, including international business, were at 5,805 units as against 3,505 units in the same month a year ago, a growth of 66 per cent.
What Do Analysts Say?
Tata successfully turned around the India PV segment owing to the new model cycle and its differentiated approach of converting Internal Combustion Engine (ICE) to EV, global brokerage UBS Securities said in a report.
However, the brokerage expects Tata Motors PV market share to peak as its launch pipeline is much weaker than market leader Maruti’s and EV competition is intensifying. Amid this, UBS gives a ‘sell’ rating on the stock with a target of Rs 450 per share.
Thus far in the calendar year 2023, shares of Tata Motors have rallied 40 per cent, as compared to 2.5 per cent rise in the S&P BSE Sensex. The strong rally in the stock price of the company has been seen as Tata Motors is assumed to register improvement in all three of its key segments (domestic PV, CV, and JLR) on improvement in semiconductor chip supplies.
Recently, Moody’s Investors Service said it has upgraded its rating outlook on Tata Motors to positive from stable.
“The rating affirmation and outlook change to positive reflect our expectation that the substantial improvement in Tata Motor’s credit profile over the past few quarters will sustain over the next 12-18 months,” Moody’s Senior Vice President Kaustubh Chaubal said in a statement.
Steadily growing volumes and profitability will support the company’s earnings and free cash flow expansion, enabling debt reduction even as its capital expenditure stays elevated, he added.
Analysts at Prabhudas Lilladher, too, have a positive stance on Tata Motors given JLR’s volume ramp-up resulting in strong revenue, profitability and FCF (aided by high order book), CV segment (on domestic side) benefitting from ongoing upcycle, operating leverage and tailwinds from lower commodity costs & lower discounting and strong market share in PV segment (13.5 per cent vs 8 per cent in FY21) led by revamped portfolio, rising SUV share and rising EV penetration. The brokerage firm has a target price of Rs 605 per share.
