Tata Motors Share Price: Shares of Tata Motors touched a 52-week high of Rs 542.45 after rising over 1 percent on the BSE during Monday’s session. This comes after the Tata Group last Friday (June 2) signed an outline agreement with the Gujarat government to set up a lithium-ion cell factory with an investment of around Rs 13,000 crore. The move comes as India looks to build its own electric vehicle (EV) supply chain.
Tata Motors has already commissioned a plant at Sandand, and has also acquired the adjacent Ford Motors plant. The process of integrating the two plants has begun and could take a year to complete, Reuters reported.
According to an official announcement by the Gujarat government, the project is set to begin with an initial investment of Rs 13,000 crore (equivalent to US$ 1.8 billion) in the first phase. The effort aims to set up a factory with a substantial capacity of 20 gigawatts (GW), furthering the government’s efforts towards 100 percent EV adoption and reducing carbon emissions to 50 percent by 2030.
The automobile major’s stock crossed its previous high of Rs 537.15, touched on May 15, 2023. It was quoted at the highest level since February 2017
The automobile giant expects passenger vehicle industry growth to moderate between 5-7 percent in the current fiscal, compared to a 27 percent sales growth in the last fiscal, according to a PTI report.
To sustain growth, the auto major is looking to introduce new products including CNG and electric models besides strengthening its existing range with new interventions, Shailesh Chandra, Tata Motors’ managing director, passenger vehicles and electric vehicles, said in an analyst call. .
Tata Motors May Sale
Tata Motors as of June 1, 2023, reported a 1.62 percent decline in total sales in May at 74,973 units compared to the same month last year. The company sold a total of 76,210 units in May 2022, Tata Motors said in a statement.
Sales of passenger electric vehicles, including international business, were 5,805 units as against 3,505 units in the same month a year ago, an increase of 66 percent.
What do analysts say?
Tata has successfully navigated the India PV segment thanks to the new model cycle and its different approach to converting internal combustion engines (ICEs) to EVs, global brokerage UBS Securities said in a report.
However, the brokerage expects Tata Motors PV market share to peak as its launch pipeline is weaker than that of market leader Maruti and EV competition is intensifying. Meanwhile, UBS gives a ‘Sell’ rating on the stock with a target of Rs 450 per share.
So far in the calendar year 2023, Tata Motors shares are up 40 percent compared to a 2.5 percent rise in the S&P BSE Sensex. The company’s stock price saw a strong rally as Tata Motors is expected to register improvements in its three core segments (domestic PV, CV and JLR) on improving semiconductor chip supply.
Recently, Moody’s Investors Service said it has upgraded Tata Motors’ rating outlook from stable to positive.
“The rating affirmation and positive change in outlook reflects our expectation that the significant improvement in Tata Motor’s credit profile over the past few quarters will continue over the next 12-18 months,” Moody’s Senior Vice President Kaustubh Chaubal said in a statement.
Steadily growing volumes and profits will support the company’s revenue and free cash flow expansion, enabling it to reduce debt even as its capital costs remain high, he added.
Analysts at Prabhudas Lilladhar also, with a positive stance on Tata Motors, benefit from JLR’s volume ramp-up on strong revenue, profitability and FCF (helped by high order book), CV segment (domestically) benefiting from ongoing upcycle, operating leverage and commodity Cost and lower discounting and strong market share in the PV segment (13.5 per cent vs 8 per cent in FY21) led tailwinds from changing portfolio, growing SUV share and growing EV penetration. The brokerage firm has a target price of Rs 605 per share.
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