Tata Motors Ltd, a standout performer in recent times, has not only delivered a remarkable 110% return in the last 12 months but has also surged an astonishing 470% in the past 5 years, establishing itself as a multibagger stock. The company’s share price doubled in 2023, making it the sole stock in the Nifty 50 index to achieve this feat.
The recent quarterly report for December 2023 showcased Tata Motors’ financial prowess, reporting a 137% rise in net profit to Rs 7,025 crore compared to Rs 2,958 crore in the year-ago quarter. Total revenue for Q3 FY24 rose by 25% to Rs 1,10,577 crore, marking a substantial growth from Rs 88,488 crore in the same period the previous fiscal.
Tata Motors has been a significant contributor to the Q3 earnings growth, accounting for 56% of the incremental growth among five Nifty constituents, according to Motilal Oswal Securities. The brokerage firm noted that the beat was driven by domestic cyclicals like autos and financials, along with global cyclicals such as metals and oil & gas companies.
As the stock trades at around Rs 930 levels, investors are pondering whether Tata Motors remains a lucrative investment opportunity. Analysts have varied perspectives on the future prospects of the Tata Group stock.
Osho Krishan, Sr. Analyst – Technical & Derivative Research at Angel One, acknowledges the spectacular move in the current financial year, highlighting the stock’s uncharted territory. While emphasizing the potential for a cool-off or profit booking after the rapid surge, Krishan identifies the 900 zone as a cushion for any downturn, with the stock poised to re-test 950 and potentially reach the 4-digit mark.
Nomura India predicts a shift from net debt to net cash in FY25 and FY26, contingent on the success of JLR’s new EV models. Motilal Oswal expects the next growth phase to be driven by JLR, with a target of Rs 1,000. JM Financial supports a target price of Rs 1,000, citing strong free cash flow generation and the reduction of net debt to support electrification.
Prabhudas Lilladher maintains a target price of Rs 1,010, emphasizing Tata Motors’ benefits from volume ramp-up, a robust order book, and favorable margins in Q3.
