Buy Tata Motors; target of Rs 516: Sharekhan

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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Sharekhan's research report on Tata Motors

Tata Motors’ (TAMO) Q1FY23 results lagged our expectations, largely due to poor performance of JLR business, marred by unfavourable volume mix. Performance of CV and PV businesses was broadly in-line with expectations. Overall performance and FCF are expected to improve gradually, driven by a positive business outlook, new launches, easing chips shortage situation, cooling commodity prices, and favourable macro-economic outlook. Management maintains its long-term targets with a caution on inflation and geopolitical situations. TAMO’s focus on EVs continues to grow multifold in Q1FY23; electric CVs are getting ready for the next leg of growth.

Outlook

We maintain Buy with an unchanged PT of Rs. 516, driven by expected recovery in volumes and operational improvement across its business verticals and geographies.

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Tata Motors - 290722 - khan