ICICI Securities sees a strong bullish trend for this Tata group stock in 3 months. | Techno Glob


Tata Motors is enjoying a strong growth trajectory, according to brokerage ICICI Securities, as its stock’s risk-to-risk ratio is well above its 52-week EMA. The brokerage firm recommends investors to buy Tata Motors shares at the price range. 410–417 while maintaining a stop loss 378 which will push the stock to its target price; 460.00 in 3 months of the target period.

Research analysts at ICICI Securities said, “Share prices of Tata Motors continue to benefit after the auto index established a base higher than the 100-day EMA, coinciding with the multi-year breakout zone of 12100. As it has bounced back from the 52-week EMA, which has provided multiple buying opportunities since August 2020, it currently offers a fresh entry with a favorable risk reward.”

They added, “On the structural front, over the past 11 months, equities have retraced 61.8% of the September-October 2021 rally ( 268-536). The slow pace of the retracement indicates good fundamental strength for the duration of the next leg of the uptrend.”

On shares of Tata Motors, they said, “We expect the share price to go in the direction. 460 ( 494-390). between oscillators; Weekly Stochastic indicates a positive bias amid oversold conditions going forward.”

“The company reported muted Q1FY23 results. Consolidated EBITDA margins for the quarter fell 650 bps QoQ at 8.2%, mainly driven by weaker performance at JLR, which reported an EBITDA margin of 6.3% and an EBIT margin of minus 4.4%. Consolidated loss after tax 5,007 crore. In contrast, Indian operations performed well in the CV and PV segments. But the management comment was positive on the demand outlook with the pending order book at JLR at ~2 lakh units. As chip availability improves, With the company maintaining the wholesale volume EBIT margin target of 5% from Q2FY23, For example: FY23 and FCF target could remain unchanged at 5% for the year at £1 billion. Continue to strive to be net auto debt free. (~ 50,000 crore as per FY24E). In terms of Indian demand potential; The CV space is expected to grow by double digits in FY23, while the PV side is operating at near optimal levels.” said research analysts at ICICI Securities.

“We see a 14.3% consolidated sales CAGR for TML in FY22-24E, with margins growing to 14.1% during that period, returning to profitability at the PAT level. At CMP, the stock trades at ~4.2x EV/EBITDA on FY24E numbers, which reflects JLR’s strong long-term outlook for profitability, positive free cash flow generation and balance sheet. In a broader view, other positive drivers include secured funding for its EV business (PV), the launch of affordable offerings in the E-PV domain (Tiago) and large domestic orders in the electric bus space.

The views and recommendations expressed above are those of individual reviewers or brokerage firms and not of Mint.

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