Know which Rakesh Jhunjhwala portfolio stock reinforced confidence among investors, Sharekhan Upgrades counter

Tata Motors share price today is Rs 317, up Rs 12.5 or 4%. Rakesh Jhunjhunwala holds 1.3% stake or 4 cr shares in Tata Motors. The Big Bull Rakesh Jhunjhunwala added this stock in his portfolio during Covid period when not many people had faith in the equity markets. Titan is the other Tata group stock that Rakesh Jhunjhunwala holds in his portfolio. Most of the analysts are bullish on the counter and believe technically the stock is ready to move further upside from current levels.

Thee latest news about this Rakesh Jhunjhunwala portfolio stock is that Sharekhan has come out with its rating. It has maintained a Buy rating on Tata Motors with a revised price target of Rs 365, factoring better outlook for domestic businesses, robust free cash flow (FCF) for the standalone businesses, sharp fall in debt, and better earnings visibility. That means there is more good news likely for investors in this counter, including the Big Bull, Rakesh Jhunjhunwala. 

See Zee Business Live TV Streaming Below:

Tata Motors held an investor day conference, where management discussed its product strategy, revenue drivers, and profitability expectations for commercial and passenger vehicle businesses. The structural growth story of the company remains intact with the turnaround of passenger vehicle (PV) business and beneficiary of the domestic CV upcycle.

The outlook for domestic commercial vehicle (CV) business is at the cusp of a sharp cyclical rebound, with notable demand arising from infrastructure, mining, and e-commerce activities. The PV business has improved significantly because of strong sales momentum with the ‘New Forever’ portfolio. During 9M FY21, the company gained market share of 300 bps in the PV segment from 9MFY2020 levels, led by the launch of New Altroz hatchback during Q4FY2020. The company expects high single-digit EBITDA in the next three years for the PV business and FCF breakeven in FY2023.

Tata Motor’s focus on product strategy, increased customer engagement, new product launches, and increased EV penetration are key drivers for the PV business. Management is committed towards reaching zero debt for its automotive business division. The company had highlighted three key strategies for becoming a zero-debt company – FCF generation through higher sales and profitability, divestment of non-core businesses, and equity topup for remaining debt. A strong result turnaround in key businesses during Q3FY2021 has a strong reason to believe that the company is on the right track towards achieving the zero debt level.

Sharekhan is positive on Jaguar Land Rover (JLR) business as well. Outlook for the JLR business is positive, aided by macro-environment improvements in Europe, UK, America, and China. Rolling out of COVID-19 vaccination programmes in many countries is keeping the overall outlook positive for the coming months, following the respective approval of various vaccines. Sharekhan expects all-round improvement in the company’s business and, thus, maintains Buy rating on the stock. The JLR will also hold investor conference later this week, post which it will update on the JLR business

Tata Motors Key Risks:

Tata Motor’s business is dependent upon cyclical industries – CV and PV. Moreover, Tata Motor’s business is present across the globe. Any slowdown or cyclical downturn in any of the locations, where the company has a strong presence, can impact its business and profitability.