India’s Tata Motors stock surges amid talk of expansion
08:37, 7 October 2021
Shares of Tata Motors hit a one-year high in Mumbai trading on Thursday, bolstered by upbeat analyst notes and news of the Tata Group eyeing troubled rival Ford Motor’s manufacturing plant in southern India.
Tata Motors’ stock surged 13.97% to INR383 ($5.12) in afternoon trade on the National Stock Exchange (NSE) after Morgan Stanley raised its rating on the Jaguar Land Rover (JLR) parent from ‘equal-weight’ to ‘overweight’ and revised its target price to INR448.
Morgan’s take
Tata Motors is seen more as a JLR/global luxury play, but an incremental upside surprise will come from its Indian business, the brokerage firm said in a note to clients, published on the Business Standard’s website.
2022/23 is expected to be a strong year for the Indian automobile industry and for Tata’s Indian business, which is anticipated to benefit from the company’s lean cost structure and refreshed model portfolio, Morgan analysts wrote in the note.
Ford’s factory
Meanwhile, a report published Thursday on DT Next’s website said Tata Group chairman Natarajan Chandrasekaran was offered the defunct Ford unit in a meeting with Tamil Nadu chief minister MK Stalin on Wednesday.
A deal could save thousands of jobs in the wake of Ford deciding to cease car production in the country.
Tailwinds
JLR and the domestic auto market stand to benefit from strong demand and product cycle tailwinds, said a 24 September stock report by Mumbai-based Edelweiss Broking.
“We remain positive on JLR’s upcoming product pipeline, which will improve the mix in favour of the more profitable Land Rover brand,” Edelweiss analysts wrote in the report.
“For the India business, after two years of slowdown, we expect volumes to recover gradually. This, coupled with a sharp cost focus, should help revive profitability,” they added.
The manufacturer of India’s highest selling electric four-wheeler – the Nexon EV – has a market capitalisation of around INR1.36trn. The counter has gained over 100% on the NSE so far this year.