Tata Motors Rises As Analysts Peg Tiago EV As Attractive, Affordable

Shares of Tata Motors Ltd. rose the most in more than a week as analysts said the automaker's newly launched Tiago EV offers an "attractive proposition" that's also "affordable".

The electric vehicle, priced between Rs 8.5 lakh and Rs 11.8 lakh, is Tata Motors' third passenger electric car in India after the Tata Nexon and Tata Tigor, but its first electric hatchback. The pre-bookings will open in October and deliveries will begin in January 2023.

While the car’s design remains same as its ICE variant, it comes with two battery size options—19.2 KWh with a range of 250 km, and a 24 KWh with a range of 306 km.

Shares of Tata Motors rose as much as 3.5%, the most since Sept. 20, in early trade. It ended 0.8% higher at Rs 402.25 apiece on Thursday.

The trading volume was more than twice the 30-day average.

Of the 33 analysts tracking the company, 27 maintain a 'buy' and three each suggest a 'hold' and a 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 29.8%.

Here's what analysts made of the Tiago EV:

• Maintains 'buy' at a price target of Rs 540 apiece, implying a potential upside of 35%.

• Tiago EV offers an attractive proposition, providing the differentiated appeal of an EV at a reasonable price.

• EVs now form 8% of Tata's India passenger vehicle volumes, and Tata has potential to gain share as EV adoption rises.

• The on-road price of Tiago EV is 27% higher than the petrol option; however, the energy cost of the former would be around Rs 5 per km lower than latter. This implies a breakeven driving distance of about 40,000 km to offset the higher capital cost of EV.

• Likes Tata's EV strategy, which should drive market share gains for the company as EV adoption rises in India, although capacity constraints might limit its total PV volume in the near term.

• Notwithstanding the near-term macro challenges for Jaguar Land Rover, Jefferies continues to like Tata given strong cyclical recovery in Indian trucks and PVs, an improved franchise in Indian PVs, and a strong EV focus.

• Maintains 'buy' at a price target of Rs 530, implying a potential upside of 32.8%.

• Tiago EV an affordable electric car with favourable cost of ownership.

• Vehicle should be more acceptable for additional car buyers using the vehicle within the city. Among fleet customers, the vehicle should be acceptable for usage below 150 km per day.

• Considering the strong head-start for the company, there is a high probability that the EV market’s share should be higher than ICE’s market share over the medium term.

• Retains constructive view on Tata Motors, led by expectations of volume upturn in both standalone/JLR divisions, aggressive cost savings, and debt reduction.

• Maintains 'buy' at a price target of Rs 520, implying a potential upside of 30.3%.

• Tiago currently does not have a direct competitor in the domestic market; however, Citroën is set to launch its C3 EV on Sept. 29, which will then be a direct competitor.

• Tiago EV overall is a very strong package of premium features and attractive pricing. With EV’s running cost of Rs 1 per km vs Rs 7 per km for ICE, the breakeven period could be around three years. Expect the introductory pricing of the car to attract a larger consumer base who might have not considered EV as a viable option due to affordability.

• Tiago has the potential to become the best-selling EV in India. Expect Tiago EV to sell 3,000-5,000 units per month and its overall EV sales to touch 60,000 by FY23.

• Tata Motors is taking the lead in EVs with a strategy to position them as premium vehicles and yet make them affordable. The learnings from Nexon EV on customer usage pattern and improving supply chain have helped the company price Tiago EV more attractively. Its brand is likely to benefit from this strategy, thus helping gain more market share.

• Every 1% market share gain in PVs has the potential to add Rs 5,000 crore to the market cap of the company.

• Prefers Mahindra & Mahindra in the sector.