SBI Cards & Payment Services, TCS, and Tata Motors: Should You Invest or Avoid?4 min read
In this article, we will be discussing the latest updates and news for SBI Cards and Payment Services, Tata Consultancy Services (TCS), and Tata Motors stocks. Should you Invest in these stocks or not, get insight into this question in this article as we move ahead.
1) SBI Cards and Payment Services:
- Recently, a negative report has come for SBI Cards and Payment Services,
- This report has come from a Global Brokerage House/Research House- Goldman Sachs which has given the target of Rs. 654 per share for SBI Cards stock
- The rationale behind this downgrading of Target or Sell Report:
- The growth reported by SBI Cards in the last 4-5 years where there was an earnings growth of 27%, is not expected to be in a similar range in the coming years.
- Goldman Sachs expects that the growth will be muted in the next 3 years as compared to the last 4-5 years of growth.
- Further, it also expects that the profitability growth in the next 3-4 years will be 18% in CAGR terms for SBI Cards and the current valuation might not sustain.
- The Stock of SBI Cards is currently trading at a PE ratio of around 80.
- Also, the research house raised concerns over the emerging ‘Buy Now Pay Later’ concept which could give tough competition to the Credit Card Business. In addition to that, there could be more regulations on this Cards space from the Government side and development of tough competition from capital-rich FinTech and Banks.
- As of now, the ‘Buy Now Pay Later’ concept with its emergence will not impact only SBI Cards but will have its impact across the industry. Also, there could be some introduction of some regulatory norms to the same in coming years as well.
- Hence, still the under penetration is very high in the credit card segment in the country, and in the presence of several growth drivers like young demographic dividend, domestic consumption, aspirational millennial the industry prospects looks quite strong.
- If we compare State Bank of India and SBI Cards, then one can witness that SBI Cards has received phenomenal distribution reach via SBI Bank branches. Also, the upcoming consumption wave is expected to come from Tier-II, Tier-III, and Tier-IV cities, and due to the strong presence of SBI Bank in those regions, SBI Cards will surely be benefited from the strong distribution reach.
2) Tata Consultancy Services (TCS):
- TCS is going to conduct an investor’s meet on Wednesday 12th January 2022 and is expected that the Board might consider the buyback of shares.
- Currently, the TCS stock is trading at around Rs. 3,900, and the buyback could be done at ~15% premium over the current market price.
- TCS’ previous buyback offer of around ₹ 16,000 crores had opened on December 18, 2020, and closed on January 1, 2021. Over 5.33 crore equity shares were bought back under the offer for ₹ 3,000 apiece.
3) Tata Motors:
- Tata Motors gained the second position in the Passenger Vehicles (PV) Market in India in December 2021. The company surpassed Hyundai to gain this position.
- Maruti Suzuki continues to be the market leader and retains its leadership in the Passenger Vehicle category. But the concern for Maruti Suzuki here is that on a month-on-month basis, the company is losing its market share.
- Despite facing the issue of shortage of semi-conductor chips, Tata Motors has been able to acquire the second position in the PV Market, record the highest-ever monthly sales (in December 2021), highest ever quarterly sales, and highest calendar year sales in 2021.
- Tata Motors sold around 35,300 units in December 2021. Out of these total sales, Electric Vehicles (EV) sales amounted to around 5.6% i.e., 2,255 units, which is again the highest-ever EV sales in the month.
- In the September-December Quarter, the company sold 5,592 units of EVs which was just 1.8% of Total Vehicle Sales. Nexon and Tigor are the two electric vehicle variants of Tata Motors.
- The company also claimed that Electric Vehicles Sales touched 10,000 units in the nine months of FY22 i.e., April 2021 to December 2021. Also, it has been able to achieve the milestone of sale of 2,000 units of EV every month.
- The recently launched model Tata Punch is also receiving an overwhelming response and is expected to gain the second position in terms of market share.
- Tata Motors has sold around 3.31 Lakh units in the calendar year 2021. In Q3FY22, the company has sold 99,000 units.
What Should Shareholders Do?
Looking at the business, industry, and other prospects, SBI Cards still look good. Issue of a kind of a sell-report by a Global Research House will surely impact the stock, as several institutional investors follow such reports. If there is some correction in the stock, then one grabs the opportunity in acquiring SBI Stocks, if this is on his/her radar. While the proposal of Buyback by TCS which is going to be considered on the Board’s meet on 12th January is a positive thing for the company as the buyback actions show the confidence of promoters over the company’s valuation. Likely, the record sales of Tata Motors are also a positive thing for the company. Hence as an investor, one should have an eye on these stocks for a longer period.