Tata Motors is up 14% as Morgan Stanley is overweight stocks

Tata Motors stocks

Shares of Tata Motors Ltd rose more than 14% on Thursday, the highest level in eight months after brokerage firm Morgan Stanley increased its overweight shares and raised its price target by 50%.On BSE, the stock hit 380.55 rupees, its highest value since February 2018. At 1:00 p.m., the script was 375 yen, 12% above its previous closing price.The brokerage firm expects a pleasant surprise from its Indian transaction.

“We expect 2022/23 to be strong for Indian autos and Tata's Indian business, and with its lean cost structure, refreshed model portfolio and high leverage," the brokerage firm said.Morgan Stanley raised its price target from Rs 298 to Rs 448 per share. Tata Motors' DVR also went from balance to overweight, increasing its price target from Rs300 to Rs119 per share. After the Indian auto cycle hits multi-year lows, Morgan Stanley believes Tata Motors will generate the highest corporate and financial returns. Market share gains in Indian cars (PV) and commercial vehicles (CVs) can also change the name from a global luxury business to a global and Indian business.“In our bull case, Tata Motors reaches zero net debt by 2024, while India PV and CV multiples go close to peers, driving 84% upside in the name.


Our base case assumes Rs158 bn net debt by FY24," the report added.In March, Tata Motors had a consolidated net debt of Rs 409 billion and was targeting zero net debt for fiscal year 24 (MSe to Rs 158 billion). The objective is achieved through internal provisions and the sale of shares in subsidiaries such as Tata Finance and Tata Technologies. For now, the company's goal of zero net debt looks bullish, but it will look to see if free cash flow turns positive during FY23, he added.Morgan Stanely expects the Indian company to make a profit in FY 23 after eight years of losses and estimates the Indian company will account for 17% of FY 24 net profit.

Sources:- live mint



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