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This Tata Group stock zoomed 75% in one month! Here's what brokerages say

This Tata Group stock zoomed 75% in one month! Here's what brokerages say

In the past one month, the share price has jumped from Rs 299 to Rs 524.90, logging around 75 per cent return in this period.

This Tata Group stock zoomed 75% in one month! Here's what brokerages say This Tata Group stock zoomed 75% in one month! Here's what brokerages say

Shares of Tata Motors Ltd surged 5.5 per cent to hit an intraday high of Rs 524.9 on the BSE on Monday. In the past one month, the share price has jumped from Rs 299 to Rs 524.90, logging around 75 per cent return in this period.

Tata Motors launched its new SUV, Punch, today. Punch is the latest addition to the automaker's popular 'New Forever' range of cars and SUVs. It was unveiled by the Mumbai-based auto giant on October 4 this year.

The company's stock has been gaining after it 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, had said.

The stock ended 2.44 per cent higher at Rs 509.60 on Monday against the previous close of Rs 497.45 on the BSE. Market cap of the firm rose to Rs 1,69,202.88 crore. It has gained 299 per cent in one year and risen 177 per cent since the beginning of this year.

"We expect the company will grow at CAGR of 22 per cent/26 per cent in topline/EBITDA over FY21/23E," said KR Choksey in a research report.

Prabhudas Lilladher believes that the TPG transaction will lead to huge value unlocking for the company given its assertive stance on EV ecosystem, early mover advantage, market share gains from well-strategised product pipeline in the emerging segment, and benefit from new product launches and PV focused strategy in traditional ICE segment.

"We earlier valued the entire PV business (including EV business) at $2.3bn, as against the EV subsidiary valuation of about $9.1bn which translates to incremental Rs 158/share. We thus assign 'BUY' rating to the stock with June'23 target price of Rs 592 valuing India business ex of EVco at 11.5x EV/EBITDA and JLR at 3x EV/EBITDA," added the brokerage house.

ICICI Direct noted that Tata Motor's stock price has underperformed the Nifty Auto index in the past five years, having de-grown at about 5 per cent CAGR.

"We value Tata Motors at a revised target price of Rs 515 on SOTP basis vs Rs 450 earlier (15x, 3.3x FY23E EV/EBITDA on India, JLR businesses, respectively)," the brokerage firm added.