Rakesh Jhunjhunwala portfolio: ICICI Securities sees more upside on this Tata group multibagger stock
Premium- The multibagger stock has rallied over 112% in a year's period and has surged 69% in the last six months
Domestic brokerage house ICICI Securities believes, key moving parts for Tata Motors are set to turn favourably from FY23E post impacting cashflows negatively in YTDFY22. Tata Group's auto subsidiary Tata Motors is among ICICI Securities' top stock picks in the auto sector along with Ashok Leyland and TVS Motors.
“Gradual improvement in chip supply for JLR, stability in raw material basket cost, domestic CV cycle uptick and strengthening domestic PV franchise are likely to drive FCF generation in FY23E-FY24E," the note on Tata Motors stated.
It has assigned a Buy rating on the multibagger stock with a target price of ₹653 per share. Shares of Tata Motors have rallied over 112% in a year's period whereas it is has surged 69% in the last six months.
"Due to chip shortage and covid-induced lockdown in India, Tata Motors' net auto debt spiralled from around ₹380 billion at FY21-end to > ₹700 billion by H1FY22. We expect this to shrink to ₹100 bn by FY24E with stake sale in smaller subsidiaries, potentially making Tata Motors a net auto debt-free entity by then, implying debt reduction to around 40% of present market capitalisation," the brokerage note further added.
The company's India PVs scaled up considerably across past two years, resulting to increase in market share. Also, EBITDA margin subsequently improved from led by scale and better pricing power. ICICI Securities expects PV business to deliver revenues of around ₹350 bn and EBITDA of around ₹35 bn, a third of standalone EBITDA.
As per shareholding pattern as of September 2021, Indian ace investor and stock market trader Rakesh Jhunjhunwala, known as the Big Bull, holds 1.11% stake in the Tata Group company.
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The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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