HomeNewsBusinessStocksBuy Tata Motors; target of Rs 632: Prabhudas Lilladher
Trending Topics

Buy Tata Motors; target of Rs 632: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Tata Motors has recommended buy rating on the stock with a target price of Rs 632 in its research report dated February 01, 2022.

February 28, 2022 / 22:51 IST
Story continues below Advertisement

Prabhudas Lilladher's research report on Tata Motors

Tata Motors’ consolidated performance surprised positively with EBITDA margin at 12.5% (+250bps QoQ). Chip supply issue at JLR seems to be easing out as production grew 41% QoQ and is expected to gradually improve over 2022. JLR order book stands at 155k units vs 125k units in 2Q. It focused on pending bookings of Range Rover (wholesales +30% QoQ) as deliveries of New Range Rover are expected to start in 4Q. For standalone operations, the company has been able to gain market share across segments; PV market share at 12% vs 8% in FY21, CV at 45.4% (+300bps from FY21) and EV at ~82%.

Story continues below Advertisement

Outlook

We maintain our positive stance on Tata Motors and reiterate as our top pick given (1) PV business is likely to gain further market share, led by new product launches and expanding portfolio. (2) CV volumes will benefit from cyclical upturn, improving fleet utilization and freight rates (3) new refreshes in Land Rover and strong order book to benefit JLR and drive FCF generation. We change our estimates by -2/+9% for FY23/24 to factor in the chip supply scenario. Maintain ‘BUY’ with a revised SOTP based Dec-23 TP of Rs 632 at 11.5x EV/EBITDA for standalone operations, 2.5x EV/EBITDA for JLR.