Tata Motors soars 5%; gains for 5th straight day after Nomura's 'buy' call

Tata Motors share price: Thus far in calendar year 2024, Tata Motors share price has outperformed the market by surging 51 per cent

Tata Motors share price today: Tata Motors share price hit a new high of Rs 1,179.05 on the BSE today, Tuesday, July 30, 2024. Tata Motors share price rallied 5 per cent on the BSE in the intraday deal, extending its past four days' upward move on expectations of strong operational performance.

In the past one week, the stock price of Tata Group’s automobile arm has appreciated by 18 per cent after brokerage firm Nomura upgraded Tata Motors stock to a 'Buy' rating and a target price of Rs 1,294 per share.

Thus far in calendar year 2024, Tata Motors share price has outperformed the market by surging 51 per cent as compared to 13 per cent rise in the BSE Sensex.

Tata Motors is a leading automobile manufacturer with a portfolio that includes a wide range of cars, utility vehicles, trucks, buses and defence vehicles. It is the leader in the commercial vehicle segment in India and has a joint venture (JV) with Fiat to manufacture cars, engines and transmissions for the domestic market. It also owns Jaguar Land Rover since 2008, which has two luxury British car brands: Jaguar and Land Rover (JLR).

Analysts at the Japanese brokerage Nomura noted that JLR's transition from premium to luxury will  help it stay one level above the high competition segments. Furthermore, the strategy, analysts said, is working well as incentives for Land Rover have been well under control despite an increasing trend across the rest of the original equipment manufacturers (OEMs).

Meanwhile, with a promising gross domestic product (GDP) growth outlook, incentives from the government to improve productivity, in both manufacturing and agriculture sectors, and continuous focus on infra, demand for CVs is expected to improve from H2FY25, Tata Motors said in its FY24 annual report.

The segment will continue to deliver strong Ebitda performance and the focus on net cash will continue, Tata Motors added.

In FY25, in the PV segment, Tata Motors expects strong growth for emission-friendly powertrains, such as compressed natural gas (CNG) vehicles and electric vehicles (EVs) amid growing adoption by customers. The shift in customer preference towards SUVs is also expected to continue. The company aims to deliver a strong growth in FY25 as it aims to capitalise on new product launches, sustain an aggressive multi-powertrain strategy and drive actions to improve profitability.

"The company expects CV demerger to be largely complete by July 2025 with capex spend on the CV side pegged at 2-4 per cent of sales, sustainable free cash flow (FCF) expected at 6-8 per cent, and strong RoCE matrix. On the PV side, it expects capex to be tad higher at around 6-8 per cent of sales, largely on new product development. On the EV side, it has pegged Capex at Rs 16,000-18,000 crore over FY24-30E with EV penetration expected at 30 per cent in its portfolio by FY30 and Ebitda breakeven in FY26," analysts at ICICI Securities said.

"Tata Motors has walked the talk on margin improvement and balance sheet deleveraging. With focus on further building upon these efficiencies, we upgrade the stock to 'BUY'. We value Tata Motors stock at Rs 1,200 on SOTP basis (12.5x, 2.5x FY26E EV/EBITDA to India, JLR; Rs 225 value to Indian E-PV & stake in Tata Tech),” the brokerage firm had said in Tata Motors' analyst day report.