Shares of Tata Motors are seen in strong rally. On October 12 i.e. in today’s trading, it set a new 52-week high on NSE. Along with this, the stock has rallied around 23 per cent in the last 5 trading sessions, including today’s slight uptrend. Ambit Capital’s auto analyst Basudeb Banerjee said that the stock has also risen due to the news of the company’s electric vehicle business getting new investors.
According to a report in the Economic Times on Friday quoting sources, private equity group TPG has moved ahead in talks to infuse $1 billion into Tata Motors’ EV business. The company’s EV division has been valued at $8-9 billion for this investment.
Basudeb Banerjee says that the major credit for the recent re-rating of this stock goes to the estimated valuation of its EV business for investment. The valuations were not anticipated to remain at this level. In the coming days, investors will be watching the progress made in the company’s EV business.
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Meanwhile, in the month of September, Tata Motor Group’s global wholesale has seen a growth of 24 per cent year-on-year. This also includes the sale of JLR. Tata Motors in its statement given on Friday said that JLR sales in the September 2021 quarter have been under pressure due to semiconductor shortfalls. However, it has remained in line with the guidance of July.
It is also true that from a near to medium term perspective, the problem of semiconductor shorting is a major challenge for Tata Motors. But the good thing is that there is a good improvement on this front. Things seem to be improving for the Indian commercial and passenger vehicle segment.
A report by Motilal Oswal on October 11 said that JLR is also witnessing cyclical recovery due to good product mix. However, due to supply issues, the recovery process may be delayed a bit. Although there will be no major support from the company’s JLR business, the recovery in its Indian business will continue. Motilal Oswal’s SoTP based target for Tata Motors is Rs 460 per share. It is worth noting that in today’s trade, the stock of Tata Motors closed at Rs 420.85 with a gain of Rs 5.10 or 1.23 per cent on NSE.