Jan 14, 2013, 04.24 PM | Source: Moneycontrol.com
Motilal Oswal is bullish on Tata Motors and has recommended buy rating on the stock with a target price of Rs 385 in its January 11, 2013 research report.
Motilal Oswal (more)
"Tata Motors, organizational changes under new India MD to improve competitiveness, with the aim to be credible #2 player in PVs by 2020 and maintain market leadership in CVs. Has set up a road map to revive PV business by focusing on consumers and offering exciting product portfolio, improving quality and improving overall consumer experience in sales and service. While product portfolio changes would need at least 2 years, it plans to improve other aspects over next 2 years. As the CV business is undergoing cyclical downturn, it is focused on being prepared for an eventual recovery. Also, Tata Motors (TTMT) plans to maintain its leadership by offering technologically superior products, with lowest total cost of ownership and superior service network. It expects M&HCV industry to post 10-15% CAGR over the next 5-10 years, while LCVs structural growth remains intact.
TTMT's capex focus is on product development in both businesses as capacities are in place for future growth. While CVs would require leveraging of existing new platforms, PVs would require development of new platforms. The stock is trading at 8.2x FY14E cons. EPS of INR40 and 7.6x FY15E cons. EPS of INR43. The DVR stock trades at 4.6x FY14E and 4.2x FY15E cons. EPS. Buy with a target price of INR385 (FY15 SOTP based) for ordinary share and INR231 for DVR (~40% discount to ordinary share's target price)," says Motilal Oswal research eport.
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