My thesis on tata motors for the next 1-1.5 year are the following -
Assumptions :
- The business will be in steady state for a while and margins can only improve.
- JLR has a very high order book of 152000 Vehicle and JLR is producing 2600 per week. So the JLR revenue has constant visibility till 58 weeks ( i.e entire 2024. This is also what the management is saying )
- They had a cumulative loss of 57 K Cr till now. so that loss will be offset with the profit that is generated hence I am considering a PBT instead of PAT of 4784 per Quarter. I am also considering the other income to be consistent. the forward PE for 2024 hence looks like (184715/(4784 *4)) = 9.65 .
So even if sales does not grow, debt reduction does not take place or margins don’t improve, the MCAP has the potential to double in the next 1 year. In FY 24 they will come out with large EVs which will have better margins ( Harrier and safari EV) . The PE of M&M is 20 . Also, I also assume we are not at the edge of a auto downcycle globally and in India for the next 1 year.
Disclaimer : 20% of PF and extremely Biased