Tata Motors up 3%, nears 52-wk high on report co may hike soon hike prices

Shares of Tata Motors gained 3 per cent to Rs 355.50 on the BSE in the intra-day trade on Tuesday on report that the company would undertake a price increase in its passenger vehicles (PV) portfolio to pass on some of the increase in input costs of materials, such as steel and precious metals, to customers.

The quantum of the hike, however, has not yet been disclosed. The stock of the Tata Group commercial vehicles' company was trading close to its 52-week high of Rs 360.65 touched on June 15, 2021.

The passenger vehicle (PV) industry’s sequential growth momentum got adversely impacted in Q1FY22 owing to restrictions imposed across the country to break‐the‐chain of Covid transmission. Yet, the industry is likely to record strong growth numbers off a low base on a year on year basis.

"The PV industry continues to witness uncertainty on account of global semi‐conductor shortage and rising commodity prices even as the demand side is on a progressive recovery path," Shailesh Chandra, President, Passenger Vehicles Business Unit, Tata Motors had said on July 1 while announcing June quarter sales numbers.

The company reported a strong recovery in FY21 with highest ever revenue in the PV segment in the last 8 years, while the commercial vehicle (CV) segment was back to pre-Covid levels. The margins also improved significantly with reduction in certain fixed costs. Going ahead, the company hopes to benefit from the government’s push for electric vehicles.

Brokerage firm IIFL Securities expects normalcy of operations from Q2/Q3 of FY22 as the rapid pace of vaccination and lower Covid cases will lead to a gradual opening up of the economy.

"The volume recovery in Jaguar Land Rover (JLR), mostly from the USA and China in Q4FY21 gives a sign that things are reversing for them. The Management has also indicated launch of new vehicles in the EV segment which is likely to give them a thumping lead over their competitors in that segment. The company also plans to become a near zero-debt company in the next three years," it highlighted in a recent report.

It added: With the kind of vision that the company has for its EV segment and the road map they have set for JLR, we think that Tata Motors has a lot of potential in the coming time. Hence, we recommend a Buy on Tata Motors with a Target price of Rs 410 based on the sum-of-the-parts valuation (SOTP) valuation.

Tata Motors is a leading global automobile manufacturer. The company offers a wide and diverse portfolio of cars, sports utility vehicles, trucks, buses, construction equipment and defense vehicles globally. It has operations in India, the UK, South Korea, South Africa, China, Brazil, Austria and Slovakia through a strong global network of subsidiaries, associate companies and Joint Ventures.