Despite the problem of semiconductor shortage, the homegrown auto major has been given an ‘overweight’ rating by global brokerage Morgan Stanley, which has revised its target price to Rs 448 from Rs 298 earlier.
Following the development, shares of Tata Motors soared 10 per cent to Rs 368.25 before trading at Rs 366.90 at 10.35 hours (IST). The scrip had settled at Rs 336 on Wednesday.
Its peer Tata Motors DVR zoomed over 9 per cent to Rs 195.70, but later traded at Rs 193.55. BSE Sensex was trading at 59,735, up 544.31 points or 0.92 per cent higher, around this time.
“Tata Motors is seen more as a global luxury play, but we believe the incremental upside surprise will come from its Indian business,” said the brokerage, which now finds the risk-reward is favourable.
“We expect 2022/23 to be strong year for Indian autos and Tata’s Indian business, thanks to its lean cost structure, refreshed model portfolio and high leverage,” it added.
As of June 30, 2021, ace Investor Rakesh Jhunjhunwala held 37,750,000 equity shares or 1.1 per cent stake in the company, which is worth Rs 1,396.7 crore at current price. The company has not declared the shareholding for the September quarter yet.
Market-share wins in India’s passenger vehicle (PV) and commercial vehicle (CV) businesses could also re-rate the name from a global luxury play to a global and India play, Morgan Stanley said.
Shares of Tata Motors have doubled in the 2021 so far. The scrip has delivered about 160 per cent returns in the last one year, outperforming the benchmark indices.
Santosh Meena, Head of Research at Swastika Investmart, said Tata Motors is showing strong bullish momentum. It is looking like a turnaround story on a boost from the E-vehicle segment.
“It was one of the most undervalued stocks in the auto sector. It is gaining market share in the PV segment, whereas the JLR business is likely to show a strong recovery,” said Meena, who has a ‘buy on dips’ recommendation on the scrip.
