This Sensex, Nifty50 stock from Tata Group has zoomed over 100% in 2023

Shares of Tata Motors hit a new high at Rs 801, and have zoomed 107 per cent so far in the calendar year 2023.

Shares of Tata Motors, part of the Tata group, hit a new peak at Rs 801, as they rallied 6 per cent on the BSE in Friday's intra-day trade backed by heavy volumes in an otherwise weak market on healthy business outlook.

The average trading volumes at the counter jumped over two-fold today. A combined 22.81 million equity shares changed hands on the NSE and BSE till 11:12 AM. In comparison, the S&P BSE Sensex was down 0.29 per cent at 72,201.

Thus far in the calendar year 2023 (CY23), Tata Motors, part of the S&P BSE Sensex and Nifty50 index, has seen its market price more-than-double or zoomed 107 per cent, as compared to 19 per cent rise in the benchmark indices.

Meanwhile, Tata Motors DVR (Differential Voting Rights) too hit a new high at Rs 537.10, and has surged 6 per cent on the BSE in intra-day trades today. Thus far in CY23, it has skyrocketed 161 per cent.

Tata Motors is a leading global automobile manufacturer of cars, utility vehicles, pick-ups, trucks and buses offering an extensive range of integrated, smart, and e-mobility solutions. Tata Motors is India's market leader in commercial vehicles (CV) and ranks among the top three in the passenger vehicles (PV) market.

The company is pioneering India's Electric Vehicle (EV) transition and driving the shift towards sustainable mobility solutions by developing a tailored product strategy, leveraging the synergy between Group companies and playing an active role in liaising with the Government of India in developing the policy framework.

On December 10, 2023, Tata Motors announced that it will increase the price of its commercial vehicles effective January 1, 2024, up to 3 per cent. The price increase is to offset the residual impact of the past input costs, and will be applicable across the entire range of commercial vehicles.

Earlier this week, Tata Motors sealed a deal with Uttar Pradesh State Road Transport Corporation (UPSRTC) to supply 1,350 units of the Tata LPO 1,618 diesel bus chassis, which are specifically designed for intercity and long-distance travel.

As per reports, Indian government is mulling over a proposal to convert one third of existing diesel buses (~2.3 million units) on domestic roads into Electric with opportunity size for the same pegged at ~8 lakh units corresponding to the business size of ~Rs 8 trillion over the next 7 years i.e. by FY30. The government will initially roll out a scheme for ~1 lakh EV buses.

The government is aggressively incentivising purchase of Electric buses under the FAME-2 scheme and even opted for aggregate bulk purchase to realise economies of scale (on behalf of various state STU’s). Given the polluting nature of diesel buses, their electrification is a welcome step and is positive for domestic OEMs like Tata Motors in our coverage universe, ICICI Securities said in a note.

Meanwhile, last week, Tata Motors announced that the stock exchanges granted the company 'no objection' to the cancellation of Tata Motors DVR shares.

"BSE and NSE granted their 'no objections' to the scheme of arrangement among Tata Motors and its shareholders and creditors for the cancellation of the entire 'A' ordinary share capital (DVR) and issuance and allotment of ordinary shares as consideration for such reduction of capital, " the firm said in a filing.

The validity of this 'observation letter' will be 6 months from December 21, within which the scheme will be submitted to the NCLT. Tata Motors on July 25, 2023 announced that it will convert its DVR shares to ordinary shares. Under this, it will issue 7 fully paid-up new ordinary shares with a face value of Rs 2 for every 10 DVR shares with a face value of Rs 2.

In November, Global rating agency Moody's had upgraded Tata Motors Limited's (TML) corporate family rating (CFR) from "B1" to "Ba3", reflecting continued improvement in the company's credit profile.

Analysts at KR Choksey Shares and Securities have a 'Buy' rating on Tata Motors with a target price of Rs 784 per share.

Looking ahead, Jaguar Land Rover (JLR) production and wholesale volumes are expected to gradually increase in H2FY24E. The EBIT margin for FY24E is now expected to improve to around 8.0 per cent compared to the previous guidance of 6.0 per cent JLR FCF guidance for FY24E is maintained at over GBP 2 Bn with net debt reducing to less than GBP 1 Bn.

Tata Motors-CV plans to continue delivering double-digit EBITDA margins backed by improving mix, demand-pull strategy and new business models like Smart Mobility Solutions, digital offerings, and non-vehicular Business. Volumes and margins for Tata Motors-PV will improve in H2FY24E due to the new-generation product launches.

The EV EBITDA margins will see further improvements in Q3FY24E and Q4FY24E due to the lowering of battery prices and new contracts coming in place, the brokerage firm had said in the Q2 result update.