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Big Bull ‘very happy’ with this group, its stocks seem on the cusp of revival

The stocks have been seeing a revival of sorts with 24 of the 27 scrips giving positive returns.

, ETMarkets.com|
Last Updated: Jan 22, 2020, 01.18 PM IST
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“He is actually consolidating the group, bringing in efficiency on cash flow, demanding performance, rewarding performance — I think he is taking all the right policy steps. I am very-very happy,” the Big Bull said.
Tata Group stocks have been seeing a revival of sorts in last one month with 24 of the 27 BSE-listed scrips giving positive returns. Even those, which are down, have seen only marginal cuts.

Major names like Tata Motors, Tata Steel and Voltas have gained up to 10 per cent. However, the biggest gainers have been Rallis India (34.7 per cent), Tata Global Beverage (22.54 per cent), Tayo Rolls (16.12 per cent) and Automotive Stamping and Assemblies (15 per cent). This solid performance was in contrast to their subdued returns last year.

Among other things, signs of resolution of the US-China trade war and clarity on Brexit appear to be working in favour of them. Besides some Tata watchers believe policies being undertaken by the new leadership team at Tata Group under Tata Son Chairman N Chandrasekaran have started delivering.

Rakesh Jhunjhunwala, a major investor in Tata Group firms Titan and Rallis India, says he is “very-very happy” with the policies that Chandrasekaran has initiated as a Tata Group boss.

“He is actually consolidating the group, bringing in efficiency on cash flow, demanding performance, rewarding performance — I think he is taking all the right policy steps. I am very-very happy,” the Big Bull said.

Since Chandrasekaran’s appointment at the helm of Tatas on October 25, 2016, four stocks have more than doubled investor wealth: Titan has delivered 215 per cent, Trent 194 per cent, Nelco 151 per cent and Tata Global Beverage 149 per cent. Remember, this period was largely marked by a painful slowdown in the broader market.

During Chandrasekaran’s tenure, 15 Tata stocks have given positive returns, while 12 have been in the red. As many 15 hit all-time highs while a few of them later came down.

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Jhunjhunwala is bullish on the group stocks from a long-term perspective. “They are going to do well. I do not know about other groups, but Tatas are going to do well. I think the worst of Tata Motors is over,” he told ETNow in an interview. However, he said the recovery will not be a quick affair.

The Big Bull is not the only Dalal Street expert backing Tata Group stocks. Sandeep Gupta, Vice-President of Motilal Oswal Financial Services, agrees with him.

“TCS remains the best bet, but other than that, we are a lot positive on Tata Global after the demerger of Tata Chemicals’ consumer business. Now it is a focused consumer player and we see a lot of growth coming into the stock from India and the UK,” Gupta said.

Motilal Oswal is ‘neutral’ on TCS, with a price target of Rs 2,340, which implies 6 per cent potential upside from current level.

The brokerage has a ‘buy’ rating on Tata Motors with price target of Rs 220, meaning a 13 per cent upside, taking into account the encouraging sales data from its flagship subsidiary Jaguar Land Rover. Kotak Securities is also a buyer of the stock, with a price target at Rs 200.

The auto company is wrestling with flagging sales for a while now, which has affected the stock performance. The scrip is down 65 per cent since Chandrasekaran took charge of the Tata Group. But it has bounced back 7.65 per cent in last one year and 11 per cent in last one month.

Titan, another feather in the Tata cap, has also been dealing with slowdown in sales. In a recent business update, the company said Q3 sales got impacted to some extent across divisions due to protest in the Northeast and other parts of the country.

JPMorgan is ‘neutral’ on the stock with a price target of Rs 1,260, signalling an 8 per cent upside from current level.
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