Sharekhan has given Buy recommendation for Tata Motors with a target price of Rs. 365 in its research report issued on Feb 26, 2021
Sharekhan’s research report on Tata Motors
The stock trades at an attractive P/E multiple of 12.4x and EV/EBITDA multiple of 3.1x its FY2023E. Jaguar Land Rover Automotive PLC (JLR) held an investor day to discuss its renewed global strategy for electrification of Jaguar and Land Rover brands and related reduction in fixed costs and the company’s focus on profits over volumes. The management has given positive guidance for its JLR business, expecting positive cashflow by FY23, net debt to be zero by FY24, and EBIT margins greater than 10% by FY26. Also, JLR would write off GBP 1.5bn in Q4FY21 related to prior investments and cash restructuring. We expect all-round improvement in the company’s business and expect TAMO’s earnings to become positive in FY2022E and 33.1% in FY2023E, driven by a 15.3% revenue CAGR during FY2021E-FY2023E and a 140 bps improvement in EBITDA margin.
We maintain our Buy rating on Tata Motors (TAMO) with a PT of Rs. 365.