Rakesh Jhunjhunwala Stocks: 14% upside seen in Tata Motors stock on easing chip supply issue, higher pricing, says CLSA

Billionaire investor Rakesh Jhunjhunwala-backed Tata Group company stock – Tata Motors shares have a potential to grow up to 14 per cent, a global brokerage firm CLSA estimated, while pointing out two main triggers - easing chip supply issue and higher pricing on the rising demand outlook. 

CLSA maintained an Outperform rating on Tata Motors with a target price of Rs 480 apiece. It valued JLR (Jaguar and Land Rover) at close to book value and domestic CV and PV business remain strong. 

The brokerage believes JLR’s volume growth in FY23 will be muted at over 6.2% as chip shortage is likely to continue but expect a sharp uptick in volume in FY24 driven by a strong order backlog.  

The brokerage’s estimates may fall flat if the chip shortage does not ease significantly as JLR has not been able to manage the supply issue as some of its peers have. 

While commodity inflation is expected to ease a bit in the near term on the expectation of continued softening in steel prices, CLSA believes that the benefits for JLR would most likely accrue in FY24 as current commodity hedges rollover.  

It also believes that OEMs (Original Equipment Manufacturers) would retain the benefits and expect pricing to remain strong for JLR on the back of a healthy order book of 168k units at the end of 4QFY22 and lower incentives, which have declined significantly over the past year. 

Tata Motors is one of the favourite stocks of ace investor Rakesh Jhunjhunwala. He holds 39,250,000 equity shares, which translates into a 1.2 per cent stake in the auto major, according to the March shareholding pattern of the company available on the exchanges. 

The renowned investor Rakesh Jhunjhunwala, who is also called as the Big Bull of the Indian stock market, publicly holds around 34 stocks with a net worth of over Rs 29,513.6 crore, as per the stock analysis website trendline.com. 

The stock on Tuesday jumped by around 2 per cent to Rs 450 per share on the BSE intraday, as compared to a 0.22 per cent fall in the BSE Sensex at around 02:45 PM.