Top 5 Multibagger Tata Group Stocks to Watch Out in 2024

Time and again, the Tata Group has been a treasure trove for investors. Not just investors, but customers too see Tata as a symbol of trust.

Hence, the stellar track record of Tata Group tells us a story of commitment to innovation and diversification over its 155-year journey.

In 2000, the total revenue of Tata group companies was a modest US$ 8.9 billion (bn). Fast forward to the financial year 2023, the figure stands at a staggering US$ 150 bn. This is enough to understand how exceptionally the Tata group has grown.

If we look back at 2023, most stocks from the Tata Group have had a stellar year.

As Nifty soared to new all time high, Tata Motors secured its position among the top three stocks with the highest returns among the Nifty 50 stocks. This is the third-best annual performance of the stock over the past two decades.

In 2023, Trent became the 5th Tata Group company to cross the Rs 1 trillion (tn) valuation milestone. Moreover, Tata Group stood as the sole Indian brand to get into the Brand Finance Global 500 list.

Now, after a year brimming with success, aren't you equally excited to know which Tata Group stocks stole the show with multibagger returns in 2023.

Here's the list.

#1 Benares Hotels

The first Tata group multibagger stock on our list is a lesser known company - Benares Hotels.

The stock has offered a whopping 205% return in the last one year.

Benares Hotels is a subsidiary of the Indian Hotels (IHC) luxury chain - Taj portfolio of hotels.

The company operates two hotels under Taj portfolio of hotels. These hotels are Taj Ganges and Taj Nadesar Palace in Varanasi. The third hotel which Benares Hotels operates is a part of IHC's Ginger Hotel portfolio in Maharashtra.

Over the past year, Benares Hotels has seen a steep turnaround, with revenue nearly doubling from Rs 500 million (m) to Rs 950 m in the financial year 2022-2023.

Earnings before interest, tax, depreciation and amortisation (EBITDA) more than doubled from Rs 147 m to Rs 337 m, and profit after tax (PAT) surged over four times from Rs 57 m to Rs 234 m, during the same period.

The post covid period has witnessed consistent positive quarters for the company, leading to increased optimism in its share price.

The chairman of Benares hotel believes that the growth was due to sharp revival of the Indian hospitality industry in 2023.

Moreover, Taj IHC's renowned brand name is contributing to high revenue per available room (RevPAR) for Benares Hotels as well.

In the recent September quarter, Benares Hotels reported impressive growth numbers. Net sales stood at Rs 259 m which is a 46.2% year on year (YoY) increase.

Net profit surged by 130.4% to Rs 68 m, and EBITDA increased 187% YoY to Rs 160 m.

The company boasts strong return ratios, with return on equity (RoE) and return on capital employed (ROCE) at 26% and 34%, respectively.

Additionally, the business is almost debt-free and has a strong promoter holding of 62.5%. Looking ahead, the company is focused on expansion, with Taj Ganges planning to add a 100-room tower, increasing the total inventory to 230 rooms.

For more details, check out Benares Hotels fact sheet and quarterly results.

#2 Artson Engineering

Second Tata group multibagger stock on this list is Artson Engineering.

Artson Engineering specialises in design, engineering, and construction for the oil & gas and hydrocarbon industry.

Back in 2008, Tata Projects acquired 75% stake in the company and since then Artson Engineering is a subsidiary company of Tata Projects.

The company has seen substantial growth and orders mainly because of its strong ties with the Tata group.

In the last one year, the stock has offered 144% returns.

During the September 2023 quarter, the company's revenue took a 11% hit to Rs 301 m as compared to Rs 340 m during the same period last year.

However, due to softer raw material cost, the profit after tax stood at a positive Rs 32 m, a significant improvement from a negative Rs 66.6 m recorded during the same period last year.

If you see, post Covid, Artson's performance was impacted by fluctuating commodity prices, but recent orders have boosted its overall outlook.

In November 2023, Artson secured an 117 m order from Andritz Technologies, followed by a Rs 252 m order from Tata Projects in September 2023.

The company's management envisions opportunities in India's transition to cleaner energy.

Moreover it aims to play a role in the sustainable revolution by identifying and manufacturing key components for this evolving supply chain.

For more details, check out Artson Engineering fact sheet and quarterly results.

#3 Tata Technologies

Third on our list is the recently listed Tata Technologies.

The company specialises in providing outsourced engineering services and digital solutions to global manufacturing clients.

As of September 2023, it serves to over 35 traditional automobile original equipment manufacturers (OEMs), its key ancillary suppliers, and 12 new energy vehicle companies.

The company's revenue stream is well-diversified, with 80% coming from services and 20% from technology solutions.

Despite being a relatively new entrant to the market, Tata Technologies has seen an impressive surge in its share price, 144% from its issue price of Rs 500, majorly due to a bumper listing.

Tata Tech operates globally, with a strong presence in North America, Europe, and the Asia Pacific. But, it still relies on Tata Motors and Jaguar Land Rover which is also a subsidiary of Tata Motors for 40% of its revenue as of 2023.

If we look at the stock's revenue and profit growth, it has offered a robust growth of 10.4% and 20.5% compound annual growth rate (CAGR), from 2019 to 2023.

Its 5-year average return on equity (RoE) and return on capital employed (RoCE) stands at 18% and 25%, respectively.

Tata Tech has a high client retention rate of 98.4%. This indicates a strong likelihood that the company will continue to maintain its existing client relationships which will boost its business performance.

For more details, check out Tata Tech's fact sheet and quarterly results.

#4 Trent

The fourth Tata group multibagger stock on this list is Trent.

Trent offers clothes, footwear, cosmetics, food, grocery and more under several brands like Westside, Zudio, Utsa, Star, Booker, MISBU, Samoh.

The stock has offered a return of 122% in the last one year.

In the recent quarter gone by, the company reported a consolidated revenue growth of 52.7% to Rs 29.8 bn as compared to the same quarter last year.

The earnings before interest, tax, depreciation and amortisation (EBITDA) rose 88% primarily due to robust revenues.

Profit before tax (PBT) soared 129% to Rs 3.1 bn.

The Star brand of the company which currently has 65 stores experienced improved customer traction and achieved operating revenue growth of 30% in the September quarter.

This growth was primarily driven by like-for-like stores, indicating a strong performance across various categories, including fresh, general merchandise, and apparel.

Despite challenging market conditions, Trent continued to expand its footprint. During the quarter under review, the company added 6 Westside stores and 27 Zudio stores across 19 cities, bringing its total store count to 223 Westside, 411 Zudio, and 27 stores.

The Chairman of Trent, Mr. Noel Tata, expressed confidence in the company's business model. He emphasised the growing relevance of Trent's offerings, resilience in its business model choices, and the attractiveness of its diversified portfolio.

Looking ahead, Trent has a focus to further expand and deepen its store presence, aiming to be more proximate and convenient to customers.

For more details, check out Trent's fact sheet and quarterly results.

5. Tata Investment Corporation

The last Tata group multibagger stock on this list is Tata Investment Corporation.

The company is a non-banking finance company (NBFC) registered with RBI and it is engaged in long-term investments in listed and unlisted shares, mutual funds, debt instruments.

In the last one year, the stock has offered a return of 104%.

The company generates majority of its revenues from dividends and interest income. In the financial year 2023, the company generated 63% of its income from dividend, 14% from interest income and 23% from fair value change gain.

In the recent September quarter, the dividend income of the company rose by 30% to Rs 897 m as compared to the same quarter last year. On the other hand, interest income increased by 28% during the same period.

Tata Investment Corporation is almost debt free and has a steady promoter holding of 73.4%.

For more details, check out Tata Investment Corporation fact sheet and quarterly results.

In Conclusion

Indeed, Tata Group's rich history of innovation and significant contributions to India's growth story make its stocks an attractive investment option.

However, as an investor, you must do your due diligence before investing in any company.

Assessing a company's fundamental strength is key to understanding its long-term potential.

For more, here is a compiled list of Tata Group stocks. It will help you analyse the fundamentals, compare its financials to its peers and make better decisions.

Happy Investing!

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