Rakesh Jhunjhunwala-owned Tata Motors shares fall on weak Q3FY22 biz replace; must you purchase, promote or maintain?

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Rakesh Jhunjhunwala-owned Tata Motors’ share worth was down 2.3% on Thursday buying and selling at Rs 495 per share as traders reacted to the corporate’s third-quarter enterprise replace for the Jaguar Land Rover unit. Tata Motors knowledgeable the inventory exchanges that throughout the third quarter of the fiscal yr, gross sales have been higher than the earlier quarter however continued to be constrained by the scarcity of semiconductors. Analysts, nevertheless, stay optimistic about Tata Motor’s home and overseas enterprise prospects. Large Bull Rakesh Jhunjhunwala owned 3.76 crore fairness shares of the auto large on the finish of the September quarter.

Semiconductor scarcity weighs on Jaguar Land Rover 

Jaguar Land Rover mentioned that retail gross sales for the October-December quarter continued to be constrained by the worldwide semiconductor scarcity. They added that there was, nevertheless, some enchancment in chip provide and wholesale volumes in comparison with the previous quarter. Retail gross sales have been down 13.6% on-quarter foundation and 37.6% on-year foundation. Nevertheless, wholesale volumes have been at 69,182 items and manufacturing volumes have been 72,184 items, up 8% and 41% respectively in comparison with the previous quarter.

The continued scarcity of semiconductors is anticipated to have a unfavorable influence on Tata Motors. “Together with China, JV wholesales are actually anticipated at under 90,000 items within the third quarter in opposition to our preliminary estimates of 1.05 lakh items,” mentioned ICICI Direct. “The sequential enchancment is fairly gradual and is under our estimates. That is prone to end in muted profitability for the third quarter amidst decrease than anticipated working leverage positive aspects,” they added.

Bullish view

Analysts at Motilal Oswal mentioned that Tata Motors’ all three companies are in restoration mode. “Whereas the India CV enterprise would see cyclical restoration, the home PV enterprise is in a structural restoration mode. JLR can also be witnessing a cyclical restoration underpinned by favorable product combine; nevertheless, supply-side headwinds will defer the restoration course of,” they mentioned. The brokerage agency believes the home enterprise of Tata Motors would proceed to see sustained revival. “The inventory trades at 20.1x FY24E consol. EPS and three.1x P/B. Keep BUY with a Mar’24 SOTP-based TP of Rs 610…” the brokerage agency mentioned, implying a 23% upside from immediately’s low.

Sure Securities can also be bullish on Tata Motors for 2022, pinning a goal worth of Rs 566 per share. “We like Tata Motors, given its enhancing India franchise, early management in EVs in India, and JLR focus returning to the higher-margin Land Rover model. Additional, the current TPG deal supplies further headroom on India EV capabilities,” the brokerage agency mentioned earlier.

Rakesh Jhunjhunwala’s second-largest wager

Tata Motors is Rakesh Jhunjhunwala’s second-largest shareholding when it comes to worth. The ace investor picked up a stake in Tata Motors within the second half of 2020 and at the moment owns simply over 1.11% stake within the firm valued at Rs 1,830 crore.

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