Rakesh Jhunjhunwala-owned Tata Motors share price may have limited upside potential from here on, said analysts at Credit Suisse in a note. The global brokerage and research firm added that Tata Motors has performed well in the domestic business, gaining market shares in both PV and CV in India and has taken early leadership in EVs in India but sees the premium valuations and Jaguar Land Rover’s ability to compete in the EV space as a concern. Tata Motors’ share price has tumbled 12% so far this year after having skyrocketed close to 145% in 2021. The stock currently trades at Rs 452 per share.
Credit Suisse has pinned a target price of Rs 474 per share on Tata Motors, leaving 5% upside potential from Tuesday’s opening price. “Tata Motors has performed well in the domestic business, gaining market shares in both PV and CV in India and has taken early leadership in EVs in India. However, premium valuations both in India and JLR and concerns on JLR’s ability to compete in BEVs over CY22 and CY23 without any new launches while peers have multiple new launches, keeps us Neutral on the stock,” Credit Suisse said.
Jaguar Land Rover announced its fourth-quarter performance recently where retail sales came in at 79000 units, down 1.4% on-quarter and 36% on-year basis. Wholesale volumes (ex-JV) came in at 76500 units and production at 83000 units. “Wholesales was up 11% sequentially but down 38% on-year and was 4% below our revised estimate for the quarter 15% below our and consensus estimates for the fourth quarter from the beginning of the quarter,” said Credit Suisse.
The brokerage firm added that losses continued at Jaguar Land Rover with overall luxury market share (across the US, EU and China) down 160bp from the previous year and 40bp on-quarter to 5.5% in the fourth quarter. “Market share was down for the full year as well in each region, marking the third consecutive year of dips,” analysts said. “While we would watch for any signs of demand moderation for JLR given the changing global macroeconomic conditions, watching for supply improvement remains key as there is a sizeable order backlog to help protect from any short-term demand hiccups,” they added. Jaguar Land Rover’s global retail orders now stand at 168,000 units.
Earlier today, Tata Motors said that global wholesales in the January-March period, including Jaguar Land Rover, were at 3,34,884, up 2%, as compared to the year-ago period. Global wholesales of all passenger vehicles, however, were 4% lower as compared to the previous year.
Ace investor Rakesh Jhunjhunwala owned a 1.18% stake in Tata Motors at the end of December 2021, with 3.92 crore equity shares. Often called the Big Bull of Dalal Street, Rakesh Jhunjhunwala increased his stake in the company between the July-September quarter and the October-December quarter, buying 25 lakh shares. Rakesh Jhunjhunwala had purchased the stock in 2020 when the scrip had tanked owing to the Covid-19 pandemic. Shareholding pattern for January-March quarter is yet to be filed.
