Brokerages remain bullish on Tata Motors, raise targets to up to Rs 400

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Brokerages remain bullish on Tata Motors, raise targets to up to Rs 400


Several brokerages have maintained a bullish view on Tata Motors after the company guided for a strong outlook for CV business, improving margin and free cash flow trajectory in India. The company recently hosted an investor day to give an India business update. The company reiterated improved profitability and positive free cash flow targets for its CV and passenger vehicle businesses and its ambition to turn debt-free by FY24. ET takes a look at what brokerages are saying:

CLSA

The brokerage has maintained buy rating and raised target price to Rs 400 from Rs 345 on rolling forward of valuation and higher value for Tata Motors’ India business. The brokerage has increased FY22-FY23 EPS estimate by 4% driven by higher volume and a better margin for its India business.

IIFL

Turnaround in passenger vehicle business combined with an expected upcycle in auto industry volumes, sharp focus on new products, cost management and cash flows bode well for Tata Motors’ standalone earnings over the coming years, said IIFL. The brokerage said standalone business of Tata Motors can reach PBT break even with positive free cash flow to the firm in FY22 if macro factors do not deteriorate. The brokerage has a buy rating with a target price of Rs 330.


Edelweiss


The brokerage said it is enthused by Tata Motors’ granular focus on every aspect of the business to bring in the turnaround in the India business. The brokerage said it is convinced that the turnaround is sustainable and India can report strong margin and free cash flow cycle. A strong volume cycle will enable commercial vehicles and passenger vehicles to benefit from the strong restructuring, said Edelweiss.


Emkay

The brokerage has a high conviction buy on Tata Motors with a target price of Rs 355.The brokerage said it remain positive on expectations of sales cycle recovery in JLR/India divisions, strong profitability growth on better scale/cost savings and de-leveraging

efforts through free cash flow/divestments.

Goldman Sachs

The brokerage has maintained sell rating on Tata Motors with a target price of Rs 175. The company has done well in the last year on all the parameters, such as market share (PV and CV), profitability and cash flows, said Goldman Sachs. The brokerage said the sharp surge in commodity prices would affect the profitability for both the segments in the near term. Tata Motors could consider and equity raise to help reduce its debt burden, said Goldman Sachs.


Macquarie


The brokerage has maintained a neutral rating given structural concerns on JLR. A sharp increase in commodity prices is likely to be a headwind till the first half of FY22, the brokerage said.





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