Rakesh Jhunjhunwala Raises Stake in this Auto Company

The listed companies of India's well diversified Tata group never fails to amaze its investors when it comes to delivering stellar returns.

In this article, we'll discuss the country's most well-known stock in the automobile space - Tata Motors.

In the last twelve months, the auto company's share price has moved up from Rs 240 to Rs 515 apiece, logging around a 115% return.

Over the last six months, the stock price has rallied over 67%.

An investment of Rs 1 lakh back in January 2021 would have turned into Rs 2.1 lakh today.

Today, Tata Motors was among the top buzzing stocks in the market.

But why?

According to the latest shareholding pattern, veteran investor Rakesh Jhunjhunwala has raised his stake in India's leading automaker marginally by 7 basis points or 0.07% during the quarter ending December 2021.

Rakesh Jhunjhuwala, who entered Tata Motors in the September 2020 quarter, held 39.3 million shares or 1.18% stake in the company as of December quarter. This was up from 36.8 million shares, or 1.11%, stake at the end of September quarter.

However, in the previous two quarters, the big bull had trimmed his stake in the company.

A bit about Rakesh Jhunjhuwala

Rakesh Jhunjhunwala, is an Indian billionaire stock trader and investor.

He manages his own portfolio as a partner in his asset management firm, Rare Enterprises. He invests in both his own name and his wife's, Rekha Jhunjhunwala. Also, he is a qualified Chartered Accountant.

Rakesh Jhunjhunwala is sometimes referred to as India's Warren Buffett.

According to Forbes, Jhunjhunwala is the 36th richest man in the country. He publicly holds 35 stocks with a net worth of over Rs 280.9 bn.

He is the chairman of Hungama Media and Aptech and sits on the board of directors of firms such as - Viceroy Hotels, Concord Biotech, Provogue India, and Geojit Financial Services.

Why did Jhunjhunwala pick up a stake in Tata Motors?

We don't know the exact reason for his investment in the company, but we can interpret his move by considering certain facts.

Everyone in the market is aware about the company's push towards electric vehicles (EVs).

Tata Motors currently has the highest share of electric vehicles sold in India.

Backed by a billion-dollar funding from TPG Capital and a new range of models, Tata Motors has taken an early lead in the EV race. It has a plan to produce 50,000 EVs in the next fiscal year starting April.

The company has sounded out vendors on an assured production plan of 50,000 EVs in fiscal 2023 and to scale that up to 1.3-1.5 lakh units annually in the next two years.

It already has bookings for more than 15,000 vehicles and plans to launch three affordable electric cars in the sub-Rs 10 lakh range in the next 12-18 months.

Moreover, the stock has witnessed favourable sentiment as a result of new product releases, price rises, capex based on the PLI scheme, and green energy activities. Add to that the narrowing losses, quarter after quarter.

Recently, Tata Motors has announced a marginal price hike on its passenger vehicles (PVs) due to an increase in input costs. Effective 19 January 2022, an average increase of 0.9% will be implemented, depending on the variant and model.

Equitymaster on Tata Motors

Given that Tata Motors has an ambitious product launch plan in the coming years, should one invest in the company?

Co-head of Research at Equitymaster, Rahul Shah, did a detailed analysis on this topic, in his Microcap Millionaires special report.

This is what he wrote...

• As far as I am concerned, I don't think one should plunge headlong into a company's stock just because it has great plans for the future.
  
  One should be able to do at least a broad calculation on what this implies for the company's revenues as well as bottomline before arriving at any conclusion.

You can read the entire report here: Tata Motors Goes Big on EVs. Time to Buy the Stock? (requires subscription).

He has also made a video on YouTube analysing Tata Motors.

You can watch the video here: Rakesh Jhunjhunwala's Rs 500 Crore Bet on Tata Motors: A Sixer or a Hit-Wicket?

Jhunjhunwala increases stake in another Tata group company

Rakesh Jhunjhunwala has increased shareholding in jewellery-watches-to-eyewear maker Titan Company to 5.1% at the end of quarter ended December 2021.

Titan is the biggest stock in his portfolio, which is valued at Rs 117 bn at today's share price of Rs 2,585 per share.

Rakesh Jhunjhunwala raised his stake in Titan to 4.02% at the end of December 2021 quarter, up from 3.8% as of September 2021 quarter.

His wife Rekha Rakesh Jhunjhunwala's shareholding remained at 1.07% in the same period.

Jhunjhunwala's total shareholding increased to 5.09% in December quarter, up from 4.87% in previous quarter.

Meanwhile, Titan recorded strong demand across its consumer businesses.

Its jewellery business grew by 37% year on year (YoY) in the third quarter of the financial year 2022. Watches & wearables was up 28%, eyewear 27%, and other businesses registered a 44% YoY growth.

How the stock markets reacted to Tata Motors

Shares of Tata Motors opened the day at Rs 510.4 on the BSE and Rs 510 on the NSE.

Its share price closed at Rs 520.7 (up 1.9%) on the BSE and Rs 521 (up 2%) on the NSE.

The share touched its 52-week high of Rs 536.5 and 52-week low of Rs 241.2 on 17 November 2021 and 18 January 2021, respectively.

Over the last 30 days, the Tata Motors share price is up 10.8%. Over the last one year, the company's share price is up 112%.

About Tata Motors

Incorporated in 1945, Tata Motors is one of the leading automotive manufacturers in India.

Essentially a CV manufacturer, Tata Motors forayed into manufacturing of passenger vehicles across all product segments viz compact, mid-size and utility in 1998-99, broadening the business horizon of the company.

It forayed into the premium luxury car segment through acquisition of JLR in June 2008, which has a presence across various geographies such as Europe, US, China, Russia, and Brazil.

Through its subsidiaries and associates, Tata Motors also has a presence in Thailand, South Africa, South Korea, and Indonesia.

Its manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat), and Dharwad (Karnataka).

In addition, JLR has four manufacturing units and two product development centers in the UK, manufacturing unit in Slovakia and China and a contract manufacturing facility in Austria.

For more details about the company, you can have a look at Tata Motors' factsheet and quarterly results on our website.

You can also compare Tata Motors with its peers.

Tata Motors vs Ashok Leland

Tata Motors vs Force Motors

Tata Motors vs SML Isuzu

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...