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

Xiaomi pumps Rs 3,500 crore into India business

BlackBuck's out to raise $150M in new round, valuation likely to jump to $800 M

With $21 Billion, Azim Premji among world’s top philanthropists

Google agreed on a $45M exit package for India-origin exec accused of sex abuse

HSBC pegs Zomato's valuation at $3.6 billion ahead of Swiggy

PayU in talks to acquire online payments firm Wibmo for $60M

Quikr close to acquiring refurbished goods marketplace Zefo in all-stock deal

What life looks like after a layoff from an IT company

General Atlantic & Tencent pump in another Rs 80 Cr in ed-tech unicorn Byju's

US Senator Warren vows to break up Amazon, Facebook, Google

SoftBank extends tech reach with $5B Latin American fund

Coverfox hits the market to raise $50M in new financing round

Cognizant faces US lawsuit alleging discrimination

China's Huawei sues US over federal ban on using its products

Germany's Delivery Hero acquires Zomato's UAE biz, invests in India ops

Ahead of deadline, debate rages on e-commerce policy

Flipkart rejigs reporting of Myntra-Jabong head Amar Nagaram

Grofers raises fresh funds from existing investors, valuation hits $425M

Sachin Bansal invests Rs 250 Cr each in NBFCs Altico & IndoStar: Report

I-bank Wolet files $800k suit over Flipkart’s Upstream buy

Flipkart FY18 revenue up 50%, but losses grow 5x

Pine Labs in talks to acquire Amazon-backed Qwikcilver for $100M

India can become 2nd largest 5G market in 10 years: Huawei

Alibaba rival Pinduoduo seeks to raise $1.5B

Twitter Q4 revenue grows to $909M as video ad sales surge

Mukesh Ambani to invest $1.4B in West Bengal, will help e-commerce expansion

Etail may lose Rs 40,000 crore, retail to get a 3rd of it

Steadview Capital invests $74M in Ola valuing it at around $6B

Byju’s ups revenue to Rs 490 cr in FY 18, losses drop by half

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