UBS bullish on TaMo CV and Ashok Leyland, assigns 'Buy'
Mumbai: UBS initiated coverage on Tata Motors' commercial vehicles business with a buy rating, citing that India's CV makers are underpriced relative to their global peers despite improving fundamentals. The brokerage set a price target of ₹550, implying an upside of over 17% over Wednesday's closing price of ₹468.10.
UBS reiterated a buy on Ashok Leyland, raising its price target to ₹225 from ₹177. The new price prediction points to potential gains of over 15% over Wednesday's closing level of ₹195.30.
The brokerage said CV stocks globally trade at a premium to passenger-vehicle makers because of better cash flows, higher consolidation and lower risk from regulatory and technological shifts. In contrast, Indian CV makers still trade at a discount to PV OEMs (Passenger Vehicle Original Equipment Manufacturers), largely due to past concerns about volume and margin volatility.
"This discrepancy indicates that the Indian market is yet to fully appreciate the value and growth potential of the CV segment," said UBS in a client note. "Since FY24, the sector has seen more stable volumes, higher margins and reduced volatility, which should help narrow the valuation gap with segments facing high disruption and competition."
UBS reiterated a buy on Ashok Leyland, raising its price target to ₹225 from ₹177. The new price prediction points to potential gains of over 15% over Wednesday's closing level of ₹195.30.
The brokerage said CV stocks globally trade at a premium to passenger-vehicle makers because of better cash flows, higher consolidation and lower risk from regulatory and technological shifts. In contrast, Indian CV makers still trade at a discount to PV OEMs (Passenger Vehicle Original Equipment Manufacturers), largely due to past concerns about volume and margin volatility.
"This discrepancy indicates that the Indian market is yet to fully appreciate the value and growth potential of the CV segment," said UBS in a client note. "Since FY24, the sector has seen more stable volumes, higher margins and reduced volatility, which should help narrow the valuation gap with segments facing high disruption and competition."
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