The Six Reasons Why Goldman Sachs Is Bullish On Tata Motors

The Smarter way to get your business news - Subscribe to BloombergQuint on WhatsApp
Shares of Tata Motors Ltd. have fallen 23 percent in the last one year, making it the worst performer among peers in the Nifty Auto Index. They are trading 40 percent lower than the 2016-end peak. The company’s stock and DVRs are among the three worst performers on the index so far this year.
Goldman Sachs says the owner of British luxury brand Jaguar Land Rover could be in for a rebound. That’s because of an expected pick-up in demand for luxury cars globally and the company’s focus on turning around domestic operations, it said.
Any meaningful rally in the stock hinges on positive surprises at its British subsidiary Jaguar Land Rover, Goldman Sachs said. JLR is 72 percent of the company’s sum-of-the-parts valuations, it said.
Factors That Will Aid Tata Motors Rebound
An upcycle in global luxury car market will push up volumes, improving the mix and lower variable marketing spend.
The new Range Rover and Range Rover Sport facelifts have the potential to arrest and reverse the weakening mix and pricing trends.
Success of launches amid stiffer competition will strengthen JLR’s position, aiding margins and free cash flows.
A play on diesel making a comeback and the hope of electric vehicles slowdown. A rapid shift towards EV will hurt JLR’s capital expenditure and margins on account of technological gap.
Lower capex in new product or technology could be a boon for JLR amid moderating volumes growth, tight competition and negative FCF yield.
Turnaround for domestic business.
Tata Motors is the cheapest auto stock with single digit price-to-earnings ratio for the ongoing in financial year. That compares with 28 times PE multiple for Maruti Suzuki India Ltd.—the most expensive auto stock.
Most brokerages are bullish on Tata Motors. 26 of the 35 analysts actively tracking the stock have a ‘Buy’ rating, while one has a ‘Sell’ on it, according to Bloomberg. The consensus return potential is 31 percent. Only BNP Paribas has a target which is lower than the current price of Rs 356 a share.

Trending News

Online companies are now selling meat and a new perception

Infosys enters JV in Japan; to pay about 2.7 billion yen

Naspers and CPPIB back Byju's, valuation jumps to $3.6 billion

Small sellers on Amazon, Flipkart seek PMO help to safeguard their interests

RBI seeks opinion of Indian govt & NPCI on WhatsApp's payment approval delay

Google+ to now shut down in April after finding a new privacy bug that affected 52.5M users

Indian govt likely to meet FY19 digital payments target

Obopay partners with Federal Bank & Mastercard to launch its own prepaid card for corporates

UrbanClap facilitates ESOP sale for upto Rs 18 crore

Walmart to tap Flipkart's tech expertise

Snapdeal claims to have added 50,000 sellers in last 12 months

Amazon targets airports for checkout-free store expansion

PayU India’s valuation estimated at $2.5 billion: Citi report

Amazon India & Flipkart are on similar run rate of $11.2B: Barclays

Tencent Music presses play on $1.2 billion U.S. IPO

Instagram Shopping may launch in India in 2019: Report

PhonePe users can now directly book IRCTC train tickets on the app

Facebook opens monetisation features for Indian content creators

UrbanClap raises $50M from Steadview Capital & Vy Capital

Xiaomi India nears Rs 23,000 cr in revenue within 4 years of operations

Paytm's unlisted owner One97 tops ₹1 lakh crore in valuation

Amazon may buy out Kishore Biyani's Future Group in new business deal

With $1.8B, Bessemer looks to make bets across fintech, healthcare technology & SaaS

Agritech startups Sabziwala and LivLush merge their business under new entity Kamatan

Avail Finance lands $17.2M from Matrix Partners & Ola, Freecharge and Flipkart founders

RBI suggests tax sops, self-regulation to build fintech space

Swiggy hires new CEO for its Access Service, gets new CFO

Logistics company Delhivery registers 44% increase in FY17 revenues

WeWork to acquire one of the oldest social networks, Meetup

Qualcomm rejects Broadcom's $103 billion offer

EasyRewardz gets $2 million Series-A funding

'Anemic' iPhone 8 demand drags Apple shares lower

Lending platform Lenden Club gets Rs 3.5cr in Equity Investment

On festive sales, Flipkart says 65% clients from Tier-II cities