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Buy Tata Motors target of Rs 592: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Tata Motors has recommended buy rating on the stock with a target price of Rs 592 in its research report October 13, 2021.

October 13, 2021 / 01:34 PM IST
HDFC Securities research report's outlook and valuations:  500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" title="HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" width="100%" height="auto" >

HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."

 
 
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Prabhudas Lilladher's research report on Tata Motors


TTMT’s announced setting up of wholly owned subsidiary dedicated to EVs and infusion of Rs75bn ($1B) from TPG in an unincorporated subsidiary. This is second restructuring post hiving off the India PV business, that will help improve focus on both the businesses. Company outlined its aggressive stance for EV business with $ 2Bn investment over next 5 years on product, platform, drive trains, technology charging infra and manufacturing. It plans to launch 10 EV products by FY26. Also, the PV business with its SUV focused approach and new product pipeline is set to gain market share. We believe this transaction will lead to huge value unlocking for TTMT given 1) its assertive stance on EV ecosystem, 2) early mover advantage 3) market share gains from well strategized product pipeline in emerging segment and 4) benefit from new product launches and PV focused strategy in traditional ICE segment.



Outlook


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


For all recommendations report, click here


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first published: Oct 13, 2021 01:34 pm

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