Tata Motors, ITC top performers of Nifty this year; two Adani stocks lose most

Auto major Tata Motors and diversified conglomerate ITC are among the top performers of Nifty so far this year, while two Adani group companies Adani Enterprises and Adani Ports lost the most on a year-to-date basis.

Tata Motors has rallied 14.65%, while ITC shrugged off concerns over duty hike on cigarettes to gain 14.19%. In comparison, benchmark indices recorded muted performances with Sensex and Nifty losing 1.49% and 2.73%, respectively.

Tata Motors recently reported a net profit of Rs 2,958 crore for the third quarter, while revenue from operations rose 22% to Rs 88,488 crore.

"Tata Motors should witness a gradual recovery as supply-side issues ease (for JLR) and commodity headwinds stabilize. It will benefit from macro recovery in India, company-specific volume/margin drivers, and sharp improvement in FCF and leverage in both JLR and the India business," Motilal Oswal said.

Another brokerage Nomura has a buy call on Tata Motors with a target price of Rs 508, which signals an upside potential of 14% from the current market prices.

ICICI Direct upgraded Tata Motors' stock from hold to buy with a target price of Rs 530, post the Q3 results "We expect a healthy 18.2% revenue CAGR over FY22-25E driven by 13.8% total volume CAGR amid a healthy order book at JLR (2.15 lakh units)," the brokerage said.

Meanwhile, ITC was in focus so far throughout the year in the run up to Budget on concerns over hike in NCCD tax on cigarettes. Despite the government raising the duty by 16%, investors brushed aside concerns hoping the impact on volumes would be minimal. The shares surged to a fresh 52-week high on Thursday.

“ITC has not taken any price hike in either the December 2021-January 2022 period or the December 2022-January 2023 period, unlike the usual increase every year. Hence, this gives the company immense room to take a miniscule price hike of 1-2%,” said Motilal Oswal Securities.

“Cigarette volumes that have been very healthy at mid-single digits in the recent quarters are likely to sustain. We like ITC from a 1-year perspective,” the brokerage said.

The company will announce its third quarter earnings today and analysts see double-digit growth in both cigarette and FMCG businesses for the quarter. The hotels business is also expected to put up a good show on the back of strong improvement in occupancy levels.

On the downside, following a report from New York-based short-seller Hindenburg, Adani Group companies came under intense selling pressure, with multiple group companies hitting respective lower circuits for consecutive days.

The Hindenburg report warned investors of heavy leverage and fraudulent practices in Adani Group companies. The conglomerate responded with a strong rebuttal, but it failed to comfort investors.

Adani Enterprises lost over half its market value this year, falling 59.43%, while Adani Ports shed 43.47% at the bourses. Both these stocks were the worst performers in the Nifty index on a year-to-date basis.

Adani Enterprises decided not to go ahead with its Rs 20,000-crore Follow-on Public Offer (FPO), citing unprecedented situation and the current market volatility. Despite muted response from retail investors, the offer sailed through on the last day on the back of strong buying from non-institutional investors.

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