21 Oct , 2021 By : Kanchan Joshi
Tata Motors has recently launched a new sub-compact SUV, Punch, starting at Rs5.49 lakh (ex-showroom) price. Tata Punch has been rated among the safest vehicle in India with 5- star and 4-star ratings, respectively, for adult and child occupant protection on NCAP standards.
Tata's new sub-compact SUV Punch holds strong volume potential as it brings SUV body style to a lower price range, which has so far been largely addressed by hatchbacks and compact sedans, said Jefferies in a note.
“Punch appears well styled for its price and has received high safety ratings. We continue to like Tata, given its improving India franchise, early leadership in India EVs, and JLR focus returning to higher-margin Land Rover brand," it said.
Jefferies has retained its ‘Buy’ rating on the Tata Motors stock and has revised its target price upwards of Rs625 per share (earlier Rs565). Its has an upside scenario target price of Rs800 whereas its downside scenario price target is Rs415 apiece.
Tata's PV franchise took a hit in the last decade, as market share fell from 15% in FY10 to 5% in FY20. Its new SUV focussed portfolio, improved product styling, and brand positioning around safety have fueled a strong turnaround, with market share recovering to 11% in 1HFY22, and Jefferies sees further upside potential from Punch.
Indian passenger vehicle (PV) market has been rapidly shifting towards SUVs; share of SUVs in total industry volumes has risen from 14% in FY12 to 21% in FY16 and further to 47% in 1HFY22. “Availability of lower-priced well-styled SUVs such as Tata's Punch should accelerate the shift from premium hatchback and small sedan segments, which form about 35% of industry volumes," the note added.
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