Domestic brokerage house ICICI Securities believes that key moving parts for Tata Motors are set to turn favorable from FY23E, negatively impacting cashflows in YTDFY22. auto subsidiary of tata group Tata Motors ICICI Securities is one of the top stock picks in the auto sector along with Ashok Leyland and TVS Motors.
The note from Tata Motors said, “Gradual improvement in chip supply for JLR, stabilization in raw material basket cost, accelerating domestic CV cycle and consolidation of domestic PV franchises will drive FCF production to FY 23E-FY24E.” likely to run.”
It has assigned a Buy rating on multibagger stock with a target price of 653 per share. Shares of Tata Motors have gained over 112% in the one-year period while it has gained 69% in the last six months.
“Due to chip shortage and the Covid-induced lockdown in India, Tata Motors’ net auto loans increased by around Rs. 380 billion at the end of FY 2011 700 billion by H1FY22. we expect it to shrink 100 billion by FY24E with stake sale in smaller subsidiaries, potentially making Tata Motors a pure auto debt-free entity by then, debt reduction of about 40% of current market capitalization,” the brokerage note further added.
The company’s Indian PVs have grown significantly over the past two years, resulting in an increase in market share. In addition, EBITDA margins subsequently improved led by larger scale and better pricing power. ICICI Securities expects PV business to generate revenue of approx. 350 billion and around EBITDA 35 billion, a third of standalone EBITDA.
As per the shareholding pattern as of September 2021, Indian veteran investor and stock market trader Rakesh Jhunjhunwala, popularly known as Big Bull, holds 1.11% stake in the Tata group company.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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