On Thursday, HSBC raised its price target for Renault from €47 to €57, representing a potential upside of 20%, while reiterating its buy recommendation on the share.
In a research note published this morning, the British bank considers that the potential of the French automotive group remains undervalued on the stock market.
HSBC says it still sees room for upside on the stock, despite its clear outperformance since the start of the year (+29%, compared with +17% for the sector).
The London-based bank particularly welcomes the group's commitment to improving shareholder remuneration, which it believes could eventually result in a payout ratio of 35%, compared with 17.5% last year.
In his view, the prospect of shareholder returns could lead to a continuation of the share's upward trend.
'Renault trades on the basis of a cash flow to market capitalization ('FCF yield') of around 20%, compared with 14% for the rest of the sector', stresses the firm.
'If the share were to trade in line with the sector average, this would imply an upside potential of 135% at share price level', says HSBC.
In addition, while the group is perceived as a loser in the electrification movement to the benefit of its Chinese competitors, the situation is quite different, warns HSBC, which points out that the automaker is preparing to launch an electric Twingo in 2026 at less than 20,000 euros.
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Renault is one of the world's leading automobile constructors. Net sales break down by activity as follows:
- sale of vehicles (91.9%): 2.2 million passenger and commercial vehicles sold in 2023, distributed by brand between Renault (1,548,748), Dacia (658,321), Renault Korea Motors (21,980), Alpine (4,328) and other (1,968);
- services (8.1%): financing services for vehicle sales (purchasing, renting, leasing, etc.; RCI Banque), related services (maintenance, warranty extension, assistance, etc.) and mobility services.
At the end of 2023, the group had 38 industrial sites worldwide.
Net sales are distributed geographically as follows: France (29.2%), Europe (49.3%), Americas (8.7%), Eurasia (6.1%), Asia/Pacific (3.5%), Africa and Middle East (3.2%).
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