HDFC Securities has given Buy recommendation for Tata Motors with a target price of Rs. 315 in its research report issued on Feb 01, 2021

HDFC Securities’ research report on Tata Motors

We remain positive on Tata Motors (link to our upgrade note: With improving outlook, FCF to turn positive), post solid 3QFY21 results. The OEM reported consolidated PAT of Rs 29.4bn (vs. loss QoQ), driven by multi-quarter high margins both at JLR and India. The luxury OEM reported positive FCF of GBP 562mn (GBP 463mn in 2Q), which has resulted in the net automotive debt reducing from Rs 678bn (in 1Q) to Rs 547bn currently. The India PV business performance improved further with margins at 3.8% (vs. 1.6% QoQ).

Outlook

We are raising our sum of the parts-based FY23 target price to Rs 315 as we increase our FY23E estimates by 23%.

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