Tata Motors Retains 'Buy' Rating From Jefferies On JLR, India Business Estimates
The brokerage expects both JLR and India businesses to perform well in FY24, driving strong earnings growth and deleveraging.
Tata Motors Ltd. has retained a 'buy' rating from Jefferies with a price target of Rs 700 per share.
Its subsidiary, Jaguar Land Rover, expects net debt to fall below £1 billion by the next fiscal, due to its resilience against global headwinds, including the shortage of chips, inflationary pressures, and geopolitical constraints, it said in an annual report on Monday.
The brand said it aims to clock a revenue of £28 billion, or approximately Rs 2.9 lakh crore, by fiscal 2024 and reduce its net debt to zero by fiscal 2025.
Jefferies On Tata Motors
Maintains a 'buy' rating and upgrades the price target to Rs 700 per share from Rs 666 per share.
JLR, at its investor day, resolved to focus on strengthening its four brands—Range Rover, Discovery, Defender, and Jaguar. It plans to launch battery electric vehicle versions for all models by 2030.
It resolved to achieve strong profitability while maintaining break-even levels and reducing capacity.
The company also plans investment optimisation via platform reduction and partnerships, such as battery sourcing from a Tata Group company.
The brokerage expects both JLR and India businesses to perform well in FY24, driving strong earnings growth and deleveraging.
It expects earnings per share to rise to an all-time high by FY25.
Tata Motors' India business forms approximately 60% of the consideration in the Jefferies price target of Rs 700 apiece.
JLR's chip issues are easing, which can drive a big turnaround in operational and financial performance, according to the brokerage's long-term view.
In an upside scenario, Jefferies expects a price target of Rs 790 per share, implying a 40% upside from the current price.
The price target is set at Rs 440 apiece, implying a 22% fall in a downside scenario.
Shares of Tata Motors Ltd. fell 0.51% to Rs 561.25 apiece, as compared with a 0.6% advance in the benchmark NSE Nifty 50 as of 1:18 p.m.
The stock declined 0.60% intraday, the most since June 8. The relative strength index was at 71, implying that the stock may be overbought.
Out of the 36 analysts tracking the company, 28 maintain a 'buy' rating, three recommend a 'hold,' and five suggest 'sell' the stock, according to Bloomberg data.
The average, calculated from the 12-month price target given by analysts, implies a potential upside of 7%.
