Buy Tata Motor; target of Rs 415: Motilal Oswal

Motilal Oswal is bullish on Tata Motor recommended buy rating on the stock with a target price of Rs 415 in its research report dated April 15, 2021.

An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.

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Motilal Oswal’s research report on Tata Motors

Jaguar Land Rover (JLR) 4QFY21 wholesale volumes (incl. CJLR) grew ~7.5% YoY to ~136.5k units. Jaguar wholesales declined ~3.4%, while LR grew ~11.3%. JLR sales saw significant improvement sequentially (+14% QoQ). This has led to dilution in the mix as the share of Jaguar has improved ~5.4pp QoQ. The sharp beat in quarterly wholesales would lead to a stronger-than-estimated 4QFY21 performance. Based on our volume estimates for JLR, we expect TTMT’s 4QFY21 consol PAT at INR36.4b. With actual wholesale volumes, the revised 4QFY21 consol PAT estimate is INR51.3b. For FY21, JLR wholesale volumes declined 21% to 124.8k units. For the full year, Jaguar/LR wholesales declined 37%/15%.

Outlook

The stock trades at 7.9x FY23E consol. EPS and 1.5x P/B. Maintain Buy, with Target Price of INR415 (Mar’23 SOTP-based).

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