Latest news with #KumarRakesh
Mint
3 days ago
- Automotive
- Mint
Tata Motors share price rises 2%, looks set to snap 3-day losing streak; should you buy?
Tata Motors' share price rose almost 2 per cent in intraday trade on the BSE on Wednesday, June 4, looking set to snap its three-day losing streak. Tata Motors share price opened at ₹ 703 against its previous close of ₹ 703.55 and climbed 1.7 per cent to an intraday high of ₹ 715.50. The auto stock, however, pared gains and traded about half a per cent up at ₹ 707 around 12:30 PM. Tata Motors' share price has lost about 22 per cent over the last year, hitting a 52-week high of ₹ 1,179.05 on July 30 last year and a 52-week low of ₹ 542.55 on April 7 this year. Tariff-related uncertainties and economic slowdown in key markets seem to have weighed on stock prices. However, the stock has seen decent gains in the recent past, rising 12 per cent in May, after the company's broadly in-line Q4 results and easing concerns over a trade war. Tata Motors reported a 51.34 per cent year-on-year (YoY) fall in its consolidated net profit to ₹ 8,470 crore. The company's revenue during Q4FY25, however, increased nominally by 0.4 per cent YoY to ₹ 1,19,502 crore. EBITDA declined 4.1 per cent YoY to ₹ 16,700 crore, while EBITDA margin declined 60 bps to 14 per cent. Meanwhile, Tata Motors' sales in the domestic and international markets for May 2025 stood at 70,187 units, compared to 76,766 units during May 2024. Total domestic sales in May declined 10 per cent YoY to 67,429 units against 75,173 units in May 2024. Tata Motors' Q4 results were largely in line with the estimates of experts. However, experts appear slightly cautious as they highlight multiple headwinds for JLR and moderation in demand for consumer vehicles (CV) and passenger vehicles (PV) in India. After the automaker's Q4 earnings, Motilal Oswal Financial Services maintained its neutral view on the stock with a target price of ₹ 690. "JLR is facing multiple headwinds, which include tariff-led uncertainty for exports to the US, demand weakness in key regions like Europe and China, and rising VME (variable marketing expense), warranty and emission costs. We expect margin pressure to persist for JLR and factor in a 100 bps margin decline over FY25-27E," said Motilal Oswal Financial Services. "Even in India, both CV and PV businesses are seeing moderation in demand. Given these headwinds, we have lowered our earnings estimates for Tata Motors by 12 per cent and 5 per cent over FY26 and FY27, respectively. For the lack of any triggers, we reiterate neutral with FY27E SOTP-based target price of ₹ 690," Motilal said. Kumar Rakesh, IT and auto analyst at BNP Paribas India, cut the company's FY26-27E consolidated PAT estimate by 2-8 per cent, adjusting the volume and margin estimates and factoring in the impact of the change in ownership of Tata Motors Finance. BNP Paribas has an 'outperform' view on the stock with a target price of ₹ 830. On the other hand, technical experts point out favourable technical indicators for the stock, which suggest one can consider buying the stock at this juncture. Anshul Jain, Head of Research at Lakshmishree Investments, underscored that Tata Motors has been consolidating around the ₹ 725 zone for the past three weeks and is expected to continue for another three to four weeks. "The ongoing tight range is setting a strong base for the next breakout. Once the consolidation phase completes, the stock is likely to break out and head higher towards ₹ 810, which is the next major weekly resistance zone. The structure remains bullish with healthy digestion of prior gains," said Jain. Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, pointed out that Tata Motors has formed a strong base near the S3 Camarilla yearly support level, suggesting a potential exhaustion of the recent downtrend. This outlook is reinforced by a clear bullish divergence observed on the weekly chart. Additionally, the RSI on the weekly timeframe has shaped an inverse head and shoulders pattern, with a confirmed breakout above the neckline, further strengthening the bullish bias, Patel pointed out. "Given these confluences, the setup points to a high-probability reversal. A long position is advised in the ₹ 690–710 range, aiming for an upside target of ₹ 780. To manage risk, a protective stop loss should be placed below ₹ 660 on a daily closing basis," said Patel. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
Time of India
20-05-2025
- Automotive
- Time of India
Auto cycles, EV sparks & IT shifts: Kumar Rakesh decodes FY26's investment gears
Kumar Rakesh , Analyst – IT and Auto at BNP Paribas, shares his outlook on key trends shaping the auto and IT sectors as we head into FY26. He believes the passenger vehicle segment has likely bottomed out and is poised for a gradual recovery, supported by stabilising affordability and potential policy catalysts. Two-wheeler growth, however, may remain subdued amid tighter financing. In IT, Rakesh sees improved valuations and strong relative earnings growth making the sector attractive despite global uncertainties. He also highlights growing EV adoption—particularly in two-wheelers—as a key theme, supported by upcoming product launches and policy incentives. Let's start with the pulse of the auto sector. Where are we in the auto industry cycle, especially when it comes to 2-wheelers and 4-wheelers? We see the passenger vehicle industry to have troughed and expect a gradual growth recovery in the coming years. The last two years' growth slowdown was driven by a high base that was created post Covid by pent-up demand, and a sharp fall in affordability. While the base is normalised, our affordability index is showing that passenger vehicle affordability has largely stabilised over the last year, after having fallen considerably in the prior years. The catalyst to drive this growth recovery would be tax cuts announced in the recent budget and implementation of Eighth Pay Commission in 2026, apart from the stable affordability. For the 2W-industry, we expect the growth slowdown to continue in FY26. We have seen a sharp growth moderation in the recent months which we believe was driven by tighter financing availability. The industry had started seeing an increase in two-wheeler delinquencies resulting in a higher credit cost for the financial institutions. We have noticed a lot of the captive financing entities of the two-wheeler companies, NBFCs and MFIs, to have slowed down their disbursements in the second half of FY25 to control the rising credit cost. In the coming quarters, while we expect the credit quality to improve resulting in an improved financing availability, the industry growth may still be single digit in absence of a buoyant financing that the industry had enjoyed over the recent years. Live Events EVs have dominated the headlines, but the numbers still show ICE vehicles holding strong. Are we witnessing a long transition phase, or is the EV narrative running ahead of itself? In the passenger vehicle industry, EV penetration has been around 2% for some time, which we believe is partly a reflection of leading automotive OEMs' absence from the EV market. As they launch their EV models in the coming years, we expect the EV penetration among passenger vehicles to rise. Globally, we have noticed hybrid penetration outperforming EV penetration in recent years. As more hybrid models get launched, we could see a similar trend playing out in India as well. In the two-wheeler industry, despite lowering of demand incentives in recent years, EV penetration has continued to rise. While demand could show monthly volatility as it adjusts to changes in incentives, we believe two-wheeler customers now well understand the value proposition of EVs and we should see a structural increase in its adoption. However, for an accelerated adoption of EVs in the two-wheeler industry, we would need to see commuter and executive motorcycles also getting electrified, which currently looks like a few years away. How do you think India-UK FTA will impact some of our listed players? Most automotive manufacturing plants in the UK are of premium and luxury brands. Hence, we do not see any material impact to India-listed passenger vehicle OEMs. That said, we could see a slightly higher number of premium/luxury vehicles selling in India, which are currently miniscule. In the IT space, do you think the recent bounce in stocks has enough steam left as the Trump administration is working out trade truce agreements with major economies? We believe we are past the trough of negative news cycle related to tariffs and counter tariffs. The economic impact of these announcements are yet to fully reflect. While that is a near-term risk, the year-to-date correction in the Indian IT Services' companies' valuations has brought down their premium over Nifty50's valuation to one of the lowest levels in the last five years. However, their one-year forward earnings growth outperformance over that of Nifty is now the highest that we have seen in almost a decade. Also, the sector is trading at close to the highest dividend yield in the last decade (outside of Covid period) creating a valuation backstop. Hence, in a scenario where the US macroeconomy goes through a shallow recession and then recovers by early 2026, risk-reward balance in the Indian IT services stocks looks favourable to us. Several mid-cap IT names have outperformed the biggies lately. Is this a structural re-rating? This is a trend we have seen particularly post Covid. We believe the growth of some of the midcap IT services companies have structurally improved in the recent years. Part of the reason is enterprises breaking down large contracts in smaller projects in which midcap companies can also now participate unlike earlier. This has resulted in an increase in the addressable market for midcap IT services companies driving their growth higher. Also, some of the enterprises now prefer to bring in a good quality mid-cap IT services company as a challenger to their large-cap IT vendor, both for cost reasons as well as technological innovations. If you had to pick a theme to watch in FY26—AI monetization in IT or EV adoption in autos—what would you bet on? AI monetisation may not translate to higher revenue for IT services companies in FY26 due to macroeconomic uncertainty and cost constraints on enterprise customers. However, in EVs, we will see 1) leading passenger vehicle OEMs launching and ramping-up their BEV models, 2) multiple new EV model launches across two-wheeler OEMs and network expansion, especially post the recent listing of major EV two-wheeler start-ups, and 3) first full year of PLI incentives for EVs being available. Hence, we would expect EV adoption to continue to gain traction in FY26 and to be a key theme in the year.
