Successful business or a company is always attributed to team and management behind it. It goes without saying that revolutionary and renowned products or services which are offered by biggest companies in the world are because of excellent management team. Good management team makes sure that ideas, visions, and objectives of founder is kept alive even after he/she is gone. Big and reputable companies are able to succeed because they tend to have strong management team running the business over the years. In India, investors place their trust in management of companies and they know that, if the management of the company is strong and ethical, their stocks are bound to perform well. For example, Tata group has been able to build trust and confidence in the minds of investors. Therefore, investors have trust when they invest in top Tata Group stocks as they know that short-term volatility will not impact long-term goals.
Tata Group has been categorised as one of India’s leading multinational business conglomerates and they have expertise in several segments including manufacturing of automobiles, steel, power, mining, retail products, IT, etc. The group caters to over 100 countries.
Top Tata Group stocks check all the boxes of strong conviction buys (i.e., strong management, track record of stable performance, market share, revenue and profit growth, etc.). If you are an investor who like to invest in the companies having strong and reputable management background, this article has come to your rescue.
Let us now discuss some of the top Tata Group stocks which are favoured by analysts.
1. Tata Motors
Tata Motors forms part of US$128 billion Tata group, and is a leading global automobile manufacturer of cars, utility vehicles, pick-ups, trucks and buses. The company offers extensive range of integrated, smart and e-mobility solutions.
The company has released its consolidated 1Q24 results.
The company continued to see its strong performance in 1Q24, with revenues coming at INR102.2k crore (exhibiting a rise of 42% year-over-year), EBITDA coming at INR14.7k crores (up 177% year-over-year) and EBIT at INR8.3k crores (increasing by INR8.8k crores), all exhibiting sharp improvement as a result of JLR and CV businesses while PV business remained steady. JLR revenues saw an improvement by 57% to £6.9 billion due to strong wholesales and improved mix resulting in EBIT margins of 8.6% (a rise of 1,300 bps).
CV volumes declined by 15% over prior year because of transition to BS-6 Phase 2. However, the EBIT margins saw an improvement to 6.5% (a rise of 370 bps) benefiting from demand-pull strategy and richer mix.
The company is optimistic on demand situation even though there are near-term uncertainties and expectations of moderate inflationary environment.
It targets to deliver strong performance over rest of the year, which should stem from healthy order book and low-break-even in JLR and improvement in demand while the company continues to support its demand-pull strategy in CV. Apart from these, there are expectations of several new launches ahead of festive season in PV and the company expects continued aggression in EVs.
The company’s FY24 has started on a right note as all automotive verticals continue to deliver strong performances. Distinct strategy which is being employed by each and every business has been delivering stable results. Expectations are there to sustain this momentum over rest of the year and achieve stated goals.
Recently, brokerage firm Motilal Oswal Financial Services covered Tata Motors in its report and the company gave a target of INR750 per share.
2. Tata Steel
Tata Steel, which has an annual crude steel capacity of 34 million tonnes per annum (MnTPA), has been categorised as most geographically diversified steel producer. The company has steel operations which are fully integrated (i.e., from mining to manufacturing and marketing of finished products).
The company has released results for quarter ended June 30, 2023 (1Q24), with consolidated revenues for the quarter coming at INR59,490 crores and EBITDA of INR6,122 crores. It saw EBITDA margin of 10% and consolidated PAT of INR525 crores. Profitability of the company was impacted by non-cash deferred tax charge as a result of buy-in transaction at British Steel Pension Scheme. As a result of this, insurance buy-in of BSPS has been completed, and therefore, Tata Steel UK has been successfully de-risked.
It has spent INR4,089 crores on capital expenditure during 1Q24. Work on 5 MTPA expansion at Kalinganagar and EAF mill of 0.75 MTPA in Punjab continues to progress. Net debt of the company came in at INR71,397 crores, with group liquidity of INR30,569 crores. India revenues came at INR34,901 crores and EBITDA was at INR7,514 crores, while Europe revenues were £2,083 million and EBITDA loss was at £153 million.
In FY23, the company saw consolidated revenues of INR2,43,353 crores and these were broadly similar on year-over-year basis despite tough operating environment throughout geographies. Consolidated EBITDA of the company was INR32,698 crores in FY23, with EBITDA margin of ~13%. Consolidated PAT of the company came in at INR8,075 crores. The company spent INR4,396 crores on capital expenditure during 4Q23 and INR14,142 crores in FY23.
India saw highest ever annual crude steel production at 19.88 million tons and highest-ever deliveries to the tune of 18.87 million tons. EBITDA came in at INR27,561 crores, translating to EBITDA per ton of INR14,606.
Europe revenues came at £9,293 million and EBITDA was £477 million. This equates to EBITDA per ton of £58. Product mix was impacted because of upgradation of Cold Mill in Ijmuiden (CM21).
Recently, analysts at Prabhudas Lilladher initiated a coverage on the stock of Tata Steel and they gave a target of INR144 per share.
While there are several other companies which are run by Tata Group, the above are the top Tata Group stocks which are being favoured by the analysts in current environment. With strong management team, it becomes very easy for the company to identify and assess key projects and then convince investors to invest in such type of venture.
Therefore, first-time investors should make sure that proper due diligence of the company’s management is done so as to know the credibility.