Two Tata Group stocks in billionaire investor Rakesh Jhunjhunwala’s portfolio can surge up to 83% from current levels, as per brokerages. They are bullish on Tata Communications, a telecom stock, and auto share Tata Motors.
Also fondly know as Big Bull of the Indian stock market, Jhunjhunwala holds 1.1% and 1.2% stakes in Tata Communications and Tata Motors respectively.
For the quarter ended March 2022, the celebrity investor has 3,075,687 shares of the telecom stock and 39,250,000 shares of the auto major.
Tata communications and Tata Motors closed at Rs 875.55 per share and 413.85 apiece on the BSE on Wednesday.
Of all the brokerages, the most aggressive target of around 83% was given by ICICI Securities for Tata Communications.
ICICI Securities maintained a buy rating on this Tata Group stock with a target price of Rs 1600, which translates into an upside of 82.85% on Wednesday’s closing price of the telecom counter.
As per the brokerage, Tata Communications has delivered on most parameters, including EBITDA margin, RoCE and reduction in net debt in FY22.
It has a strong position in core connectivity business in India market with leadership position in VPN, internet, IPL, India DC-DC dedicated build, while 2nd for NPL + Ethernet, said ICICI Securities
On the risks, it said extended chip shortage, higher than expected compression in margin and higher capex outlay not having the desired results can play the spoilsport.
“Though data services revenue growth was disappointing in FY22, we continue to keep faith as management strategy is anchored at driving faster and durable growth. Our estimates remain unchanged with target price at Rs1,600,” it added.
Global brokerage firm JP Morgan maintained an overweight rating with a target price of Rs 525. From Wednesday’s closing price, the share can gain up to 27% within a period of one year.
JP Morgan’s bullishness on the stock is based on Tata Motors’ deleveraging journey. It said the management has guided for zero net debt by FY24, which would be achieved through a combination of “self-help” strategies which should strengthen both its businesses – JLR and India.
“Market-share gains PVs and strengthening of leadership in Cvs. Tata Motors also dominates (85% share) the nascent EV segment within Indian PVs. JLR’s electrification should improve over the next three years,” it said in the commentary.
Meanwhile, Nomura maintained a buy rating and Credit Suisse a neutral view on the counter for target prices of Rs 471 and 438 respectively.