These 2 Tata Group stocks started 2023 with a bang. Read the details here
We are two months away in 2023 and the Indian stock market has already completely changed. Both Sensex and Nifty benchmarks showed sharp moves on some days.
This volatility comes as the Adani crisis continues to make headlines following allegations from Hindenburg Research.
The crisis has escalated so much that it has now raised questions about other Indian conglomerates as well.
Amidst all this, the performance of India’s most reputable business group has remained limited so far.
Several Tata Group shares have given negative returns so far in 2023. Even the strongest companies in the Tata Group such as Titan and NELCO are down 5-20%.
Tata Group’s worst performing shares of 2023 so far
Out of 28 listed companies, about 17 companies failed to continue the good show in 2023.
However, some of their stocks have performed well on the stock market.
In today’s article, we will talk about the two outliers of the Tata Group that managed to provide good returns.
#1 Hotels in Varanasi
Benares Hotels is a subsidiary of the Indian Hotels Company. The Company’s hotels include Taj Ganges and Taj Nadesar Palace in Varanasi as well as Gateway Hotel in Gondia, Maharashtra.
This lesser-known or hidden Tata Group stock is up 24% so far in 2023, on the back of robust earnings reported for the December 2022 quarter.
For the December 2022 quarter, the company recorded a 46.7% year-on-year increase in revenue to 282.6 million rupees (m). It reported revenue of Rs 192.7 million in the same quarter last year.
Meanwhile, net profit jumped 87.9% year on year to Rs 82.9 million from Rs 44.1 million a year ago.
For the quarter under review, Benares Hotels recorded its highest EBITDA ever. It reported a 66.4% year-on-year increase in EBITDA from Rs 126.6 million to Rs 76 million in the December 2021 quarter.
The company also doubled its EBITDA and increased revenue by 51% compared to the pre-covid level for the first nine months of the current financial year.
These robust financial results are due to continued strong demand and increased momentum from social events.
Financial overview of Benares Hotels – 5 years
As evidenced by its December 2022 results, the company has rebounded as tourists begin to travel again in full swing.
It’s practically a debt free business.
The company is eager to expand its properties with little or no debt.
Benares Hotel share price performance so far in 2023
Data source: BSE
#2 Tata Engines
Second on the list is Tata Motors.
Tata Motors manufactures passenger cars, trucks, vans, coaches and buses. The company is also a market leader in the electric passenger vehicle segment in India.
With a 14% rise in its stock price so far in 2023, Tata Motors is the second best performer in the group.
The rally comes after the company returned to profit in the December 2022 quarter after seven consecutive quarters of losses.
For the December 2022 quarter, revenue jumped 22.9% year-on-year to Rs 896.1 billion.
It posted a consolidated net profit of Rs 30.4 billion in the quarter of December 2022, against a loss of Rs 15.1 billion in the same quarter last year.
These profits were due to a strong order book, better supply of semiconductor chips, moderate raw material prices and an improved product mix.
The December 2022 quarter was the strongest for passenger vehicle sales, with Tata Motors recording its highest ever retail sales of over 50,000 units.
Over the past five years, the company’s sales have remained stable while its net profits have declined by 10.5%.
This decline is due to a weaker than expected supply of specialty chips and a drop in JLR sales.
Financial overview of Tata Motors
However, the winds have changed as chip supplies have improved over the past few months.
In addition, demand for PV in general, and for JLR (Jaguar Land Rover) products in particular, remained strong in major global markets, although the macroeconomic environment was not favorable.
Apart from that, its CV (commercial vehicles) business in India has continued to see a cyclical recovery and has a positive outlook.
Management also made a strategic shift to a demand-driven model to restore its double-digit margins.
Tata Motors on February 20, 2023 signed a Memorandum of Understanding (MoU) with ride-sharing app Uber.
The two companies have signed a pact for 25,000 units of Tata Motor’s XPRES-T electric sedan for Uber India’s premium class vehicles. This MoU marks the largest fleet order of four-wheel electric vehicles in Indian industry.
Also riding the electric vehicle (EV) megatrend, Tata Motors has remained in the fast lane when it comes to electric vehicles (EV). The Tata Group is leading the electric vehicle revolution in India.
Apart from this, it has entered into a strategic partnership with Japanese semiconductor manufacturer Renesas Electronics Corporation to design, develop and manufacture semiconductor solutions for domestic and global markets.
Tata Motors shares price performance so far in 2023
Data source: BSE
Tata Group: the way forward
Given the pace at which the Tata Group is growing, the conglomerate has firmly entrenched itself with the people of India for over 150 years and is not likely to abandon this position any time soon.
The Tata Group has big goals for its next stage of development.
With a renewed focus on India, the group plans to devote more than 80% of its capital expenditure to local businesses over the next five years, with a planned investment of $90 billion.
It includes Tata Power’s plan to spend more than US$10 billion over the next five years on renewable energy, a US$5 billion project to build Giga factories and its bets in technology and electronics. .
The group intends to manufacture 5G telecom equipment and is also upping its game in the semiconductor space.
Two other companies in the group, Tata Play and Tata Technologies, are expected to go public in 2023.
Then there’s also Tata Electronics, which is hailed as the next TCS from the Tata Group. It will be interesting to watch these Upcoming IPOs.
Disclaimer: This article is for informationpurposes only. This is not a stock recommendation and should not be treated assuch.
This article is syndicated from equitymaster.com
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