Rally in Tata Group Stocks: Tata Motors and Tata Power

5paisa Research Team 5paisa Research Team 10th December 2022 - 07:23 pm

The Tata group overall has been one of the biggest wealth creators in the last one year. You pick any stock be it TCS, Tata Steel, Tata Motors, Titan or Tata Power; they have all given exceptional returns in the last one year. But two stocks have stood out in the last one month for their breath-taking rally. They are Tata Motors and Tata Power.

Stock	CMP (Rs.)	1-Month Returns	Returns from yearly low
Tata Motors Ltd	Rs.420.65	39.66%	233.85%
Tata Power Ltd	Rs.195.15	48.91%	277.83%

A quick look at the table is enough to underline the kind of rally that these stocks have been through. Till about a couple of years ago, these stocks virtually did nothing. Today, both Tata Motors and Tata Power are at multi-year highs. Interestingly, the broad underlying theme is also the same. In the case of Tata Motors, the reason for the enthusiasm is the foray into green EVs while in the case of Tata Power it is the focus on Green Energy.

Let us look at Tata Motors first. Clearly, the markets are extremely enthused about the aggression shown by the company on the electrical vehicles foray. At a time when the Maruti Chairman has refused to even seriously look at EVs, the Tatas are heavily investing their bandwidth into the electrical vehicles business. Now there is talk of stake sale.

Check: Best EV Stocks to Buy

According to latest reports, Tata Motors may look at selling a stake in the EV business to TPG, Temasek and others to monetize about $1 billion. The deal is expected to value the EV business alone at around $8-9 billion. If you add the domestic PV, CV and the global JLR business, it surely makes a case for re-rating Tata Motors. That is evident in prices.

On the green energy front, Tata Power is making aggressive forays. Along with its subsidiaries, Tata Power has installed / managed capacity of over 13 GW of solar power capacity. The sharp bias in favour of green energy got a sudden fillip in the last one month when the coal shortage created a crisis of sorts for the thermal power sector.

Currently, its solar order book is worth Rs.9,264 crore and that is helping valuations in a big way. The price action in Tata Motors and Tata Powers clearly highlights their green shift.