Amid the ongoing market rally, shares of Tata Motors, Tata Motors DVR, Tata Chemicals, Tata Power, and Tata Investment Corporation were up in the range of 10 per cent to 20 per cent on Wednesday. Titan and Tata Steel were the top performers on the Bombay Stock Exchange (BSE), advancing over 3-5 per cent.
Tata Motors stock rose 20 per cent to hit a new 52-week high of Rs 504.95 on BSE after the company said it will raise $1 billion (Rs 7,500 crore) in its passenger electric vehicle (EV) business from TPG Rise Climate at a valuation of up to $9.1 billion.
Tata Motors Ltd (TML) and TPG Rise Climate have entered into a binding agreement whereby TPG Rise Climate, along with its co-investor ADQ, will invest in a subsidiary of Tata Motors that will be newly incorporated. The first round of capital infusion will be completed by March 22 of next year and the entire funds will be infused by end of 2022, Jim Coulter, Managing Partner, TPG Rise Climate and Founding partner of TPG, said.
Market cap of the firm rose to Rs 1,67,658.94 crore on BSE. The stock has gained 276.5 per cent in the last 12 months and has risen 175 per cent since the beginning of this year.
"The stock currently trades @15x FY23E and 11x FY24E hence and we expect a target of Rs 550 wherein it will trade @12.5x FY24E. Any meaningful dip can be used to buy the stock as it will be a pure-play on economies opening up and activity normalizing globally," Jitesh Ranawat, Head Institutional Sales at Marwadi Shares and Finance Ltd, told BusinessToday.in.
"We expect demand to normalise across some of the Tata Motors key markets. Besides which tight control on cost can help boost up profitability. We remain positive about JLR's upcoming product pipeline. Reducing capex spends should help JLR's (free cash flow) FCF position," he noted.
"For India's business, we expect volumes to recover gradually post slowdown. The company's balance sheet has shown strong improvement. Reduction in debt by Rs 14 billion QoQ to Rs 40.9 billion was due to better profitability and improving working capital. India's business cash profits continue to be higher than capex. Management has indicated that generating FCF remains the central focus. New launches, hold-on capex will be the key drivers to watch for in the next 12 months," he further added.
Shares of Titan Company Limited have been gaining after the Tata Group company reported a strong recovery in demand in the July-September quarter. The large-cap stock surged 5 per cent to hit an all-time high of Rs 2,609.9 on BSE. Market cap of the firm rose to Rs 2,29,204.19 crore.
On account of its strong sales performance, we expect Titan to deliver robust performance in Q2 of FY2022 with revenue and operating profit growing by 73 per cent and 157 per cent, respectively, during the quarter. We expect the trend to continue in the coming quarters with higher demand across businesses during the ongoing festive season," said Sharekhan in a research report"
"We have revised upwards our earnings estimates for FY022/FY2023/FY2024 to factor in better-than-expected growth in the jewellery and other businesses. Titan is well poised to achieve strong revenue and PAT CAGR of 23 per cent and 54 per cent, respectively, over FY2021-FY2024," it stated.
It added, "The stock is currently trading at 77x and 64x its FY2023E and FY2024E EPS (and EV/EBIDTA of 50.2x/41.9x its FY2023/FY2024E EBIDTA), respectively. We maintain our Buy recommendation on the stock with a revised PT of Rs 2,790."
Speaking exclusively with Business Today TV's Udayan Mukherjee, big bull Rakesh Jhunjhunwala said that Tata Motors' foray into the electric vehicles segment will boost the stock going ahead.
Commenting on Tata's successful bid for Air India, the ace investor has said that it gives the stock market confidence that the government's divestment plan is on track. He said airlines are losing money, and something has to improve. "Good scope of profitability despite all troubles," he added.
Shares of Tata Power jumped 19 per cent to hit an all-time high of Rs 232.4 on BSE after the company announced that Tata Power Solar has bagged orders worth Rs 538 crore from state-run Energy Efficiency Services Ltd (EESL) to set up multiple distributed ground-mounted solar projects totalling 100MW.
Tata Power Solar Systems Limited (Tata Power Solar), leading integrated solar company and a wholly-owned subsidiary of Tata Power, has received a "Letter of Award" (LoA) to build 100 MW of distributed ground-mounted solar projects for EESL.
Brokerage firm Anand Rathi noted that working capital management has helped to keep net debt in check. Also, continued deleveraging of the balance sheet through the sale of non-core assets are key near-term triggers for the company.
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