Tata Motors zooms 5% to fresh high; DVR shares jump 4% amid EV subsidy buzz

Shares of Tata Motors rallied 5 per cent on the BSE to a fresh high of Rs 665.50 in Friday’s intra-day trade. The stock surpassed its previous high of Rs 665.40 touched on July 26, 2023.

Tata Motors DVR (Differential Voting Rights) shares gained 4 per cent to Rs 443.10 on the back of heavy volumes. The shares were quoting close to the record high level of Rs 444 touched on September 15, 2023.

The average trading volumes on the DVR counter more than doubled today. A combined 3.8 million equity shares changed hands on the NSE and BSE. In comparison, the S&P BSE Sensex was up 0.02 per cent at 66,419 at 02:26 PM.

According to media reports, the government is working on a policy to support local manufacturing of electric cars, a decision likely to provide a level playing field for the industry, The Economic Times reported. The push for local manufacturing is likely to help generate more jobs and bring down the car's overall prices. CLICK HERE FOR FULL REPORT

Tata Motors is an auto OEM from the house of Tata’s, operating in domestic (PV, CV) and global markets (Jaguar Land Rover or JLR).

JLR is a luxury car brand which includes two prominent names i.e., Jaguar (models like I-pace, etc.) & Land Rover (Defender, Range Rover, etc.). Tata Motors India is a leader in domestic CV space with around 40 per cent market share while is the third largest player in the PV segment with around 14 per cent market share (FY23).

Tata Motors is at forefront of electric vehicle (EV) transition with market leadership in domestic electric PV space with over 70 per cent market share and is also a prominent player winning orders in E-buses segment under tenders issued by the Convergence Energy Services Ltd (CESL).

JLR too has ambitious EV plans with Jaguar brand to go all electric by 2025 and 1st Range Rover BEV slated to launch in CY24E.

Amidst tangible efforts from Tata Motors, it is comforting to see promoter Tata Sons supporting the firm's EV forays through dedicated EV battery plants (Tata Sons has announced plans to build battery cell giga factory in UK as well as in India).

According to ICICI Securities, JLR is set to post record profitability in the current financial year 2023-24 (FY24).

"Volumes, earnings and cash flow generation at JLR has been volatile in the past. The company however though indigenous improvement in its product portfolio, cost control and efficiencies has successfully turned around its operations and is now geared up for profitable growth going forward", the brokerage firm said.

Analysts at Nomura see a strong orderbook and healthy growth of retail demand. The brokerage firm believes with improved production in H2FY24, JLR is on track to meet its estimate of 406.5k (ex China JV) units for FY24F. It reiterates Buy rating for Tata Motors with an unchanged SOTP-based target price of Rs 786 per share.

Tata Motors’s all three businesses are in a recovery mode. The India CV business is expected to see a cyclical recovery, while the India PV business is in a structural recovery mode. JLR is also seeing a cyclical recovery, supported by a favorable product mix, said those at Motilal Oswal Financial. 

"However, supply-side issues may delay the recovery process. While there will be no near-term catalysts from the JLR business, the India business (50 per cent of SoTP) will continue to see a recovery," they said. 

The brokerage firm has ‘buy’ rating on the stock with a target price of Rs 740 per share.