Tata Motors, Trent: These 15 Tata group stocks have outperformed Sensex in 2023; should you invest now?

More than 50 per cent of Tata group stocks outperformed the benchmark BSE Sensex in the first half of 2023. As a result, the combined market capitalisation of Tata group companies soared nearly 9 per cent year-to-date to Rs 22.87 lakh crore on June 30. Market watchers see more upside in a couple of group stocks.

With a rally of 64.30 per cent, Benaras Hotels emerged the top gainer in the list. Shares of the company advanced to Rs 4,420.65 on June 30 from Rs 2,690 on December 30. The scrip gained nearly 50 per cent in 2022.

Tata Motors is the next on the list. After falling 19.50 per cent last year, shares of the auto major gained 53.40 per cent so far in 2023. Automobile Corporation of Goa also gained nearly 33 per cent YTD to Rs 1,213.10 during the same period. Shares of the company plunged 9 per cent in 2022.

Tata group’s other major companies including Trent, Tata Communications, Tejas Networks, The Indian Hotels Company, Orient Hotels and Tata Elxsi also rallied somewhere between 20 per cent and 31 per cent during January-June 2023.

Brokerage Sharekhan is bullish on Trent with a target price of Rs 2,025, indicating an upside of nearly 15 per cent from the current market price.

“Trent is likely to post strong revenue and earnings growth of 23 per cent and 58 per cent over FY2023-25. This will be driven by consistent strong double-digit like-for-like same-store sales growth driven by consistent high footfalls, strong traction on online platform and increase in the billing size coupled with consistent store addition in the coming years. Zudio is expected to scale up fast with strong store addition in the key markets. We expect Trent’s EBIDTA margins to improve in FY2024 as raw material prices have corrected from highs, which along with a better product mix and efficiencies will help in posting improved profitability,” Sharekhan said.

On the other hand, ICICI Securities on June 29 gave a ‘Buy’ rating to Tata Communications with a target price of Rs 1,810. Shares of the company traded at Rs 1,594.45 on June 30.

“Tata Communications has agreed to acquire Kaleyra, a US-based omnichannel integrated CPaaS player for enterprise value of $250mn (0.73x CY22 sales). This is likely to enhance the company’s global position in CPaaS services (which is growing at 25 per cent CAGR as per Juniper) and with The Switch acquisition, Tata Communication’s position in the US may become stronger. Strong digital businesses in the US can assist Tata Communications to cross-sell other products, thereby, improving market share in core connectivity and digital services,” the brokerage said adding the company aims to grow data revenue by 2x to Rs 28,000 crore by FY27.

Titan Company (up 17.30 per cent), Tata Coffee (up 14 per cent), Tata Consumer Products (up 12.10 per cent), Tata Investment Corporation (up 11 per cent), Tata Chemicals (up 6.80 per cent) and Tata Power (up 6.80 per cent) stood among other major outperformers. On the other hand, the benchmark BSE Sensex gained 6.40 per cent during the same period.

Elara Capital has an ‘Accumulate’ rating on Tata Consumer Products with a target price of Rs 933. Shares of the company traded at Rs 860 on June 30.

“Tata Consumer Products’ new businesses (15 per cent of India branded business) grew over 50 per cent for the past two years. This momentum may continue to be led by distribution expansion and higher adoption of such segments by consumers. The core portfolio of tea and salt continues its steady growth trajectory and may gain momentum as rural picks pace and inflation moderates. The company is focused on increasing the reach of its tea business in the weaker markets of rural Tamil Nadu, East Uttar Pradesh and parts of Andhra Pradesh,” Elara Capital said.

Group’s heavyweight Tata Consultancy Services (TCS) delivered 1.30 per cent YTD. Nelco, Automotive Stampings and Tayo Rolls also gained 2 per cent, 2.7 per cent and 2.7 per cent, respectively.

IDBI Capital has a ‘Buy’ rating on TCS ahead of Q1 earnings. The brokerage has set a target price of Rs 3,740 for the IT major. The scrip traded at Rs 3,300 on June 30.

Among the major losers in the list, Tata Steel Long Products, TRF, Tinplate Company of India, Tata Steel, Tata Metaliks, Voltas, Rallis India and Tata Teleservices (Maharashtra) declined up to 24 per cent YTD.

IIFL Securities last month fixed a target price of Rs 130 for Tata Steel. The scrip traded at around Rs 112 on June 30.

“Tata Steel’s FY23 annual report reiterates the target of doubling India capacity to 40mtpa by 2030 while sustaining cost leadership through multiple initiatives. R&D remains in focus to drive efficiencies, new higher value-added products and adjacent products. The company has laid out a detailed path to meet net-zero targets in India and Europe and has seen progress as well. Deleveraging should resume from FY24, primarily aided by Indian cash flows,” IIFL Securities said in a report.

Also read: ZEE Entertainment shares climb 3% as media firm pays IndusInd Bank dues

Also read: Hot stocks on June 3, 2023: Mazagon Dock, Suzlon Energy, Brightcom Group, Power Grid and more