Buy Tata Motors; target of Rs 630: KR Choksey

KR Choksey's research report on Tata Motors

Tata Motors Group sold 1,086,734 vehicles in FY22 with global wholesales increasing by 20%. The revenues were 11.5% higher than last year. FY22 showed strong signs of growth which supported economic recovery through higher infrastructural spending, higher industrial activity, re-opening of offices/schools etc. The company operates as three independent business units of Commercial vehicle, Passenger vehicle and JLR (Jaguar Land Rover). Commercial vehicle segment has a domestic market share of 45%, while Passenger segment and EVs have domestic market shares of 12% and 87% respectively. Performance during the quarter was affected by inflation and semiconductor shortages. JLR performance was affected more than its competitors due to global shortage of semiconductors. The company tried to minimize the negative effect. The performance of the JLR segment is expected to see a gradual recovery in FY23. By the end of March 2022, JLR had received more than 45.5K customer orders for the New Range Rover.

Outlook

We expect the company will grow at CAGR of 18.0%/41.2% in revenues/EBITDA over FY22-24E. We apply a multiple of 19.25x on FY24E EPS of INR 32.7 and arrive to target price to INR 630. Accordingly, we maintain our “BUY” rating on the shares of Tata Motors.

More Info

At 14:48 hrs Tata Motors was quoting at Rs 412.10, up Rs 3.75, or 0.92 percent.